LPS Report: Listings of Bank Owned Homes Continue to Surge

by Simon Lindsay on Foreclosure Listings

An in-depth study of the April 2009 performance of the mortgage industry showed a great possibility that bank owned property listing will continue to rise as delinquency and foreclosure activities remain unabated.

The LPS Mortgage Monitor of Lender Processing Services Inc., a provider of integrated services and technology to the mortgage servicing industry, has released the report analyzing the mortgage industry’s performance, based on information and data gathered in April.

According to the report, mortgage delinquencies at risk of being placed on listings of bank owned homes increased slightly by 8.1 percent, representing a 43 percent rise from the same period a year ago.

The number of homes on listings of bank foreclosure increased by 2.7 percent, representing a 90.5 jump a year ago. On a positive note, foreclosure starts decline in April compared with March figures, but still remain the highest compared with other previous months.

Furthermore, the report’s delinquency analysis showed that vintage loans are showing signs of improvement through lower delinquency rates. Vintage loans this year have reduced default rates compared with vintage loans from 2004-2008.

The report also indicated a steady rise in loan modification activities, particularly in deals involving interest rate reductions and unpaid loan’s principal balance. Additionally, an analysis of mortgage loans six months after modification showed that reducing the unpaid principal balance translates to a low re-default rate of 25 percent.

The LPS Mortgage Monitor also examined rates of delinquency and foreclosures by state. It reported that in Florida, one out of five properties is at risk of being placed on listings of bank owned homes. Additionally, the national average of mortgage loans that are in some kind of delinquency or foreclosure has reached 10.8 percent.

Nationwide foreclosure filings in April reached one out of 374 homeowners. Industry experts noted that the rising number of people who lost their jobs is contributing to the increasing listings of bank owned homes.

Some economists believed that the rapid spread of foreclosures is being fueled by adverse life events and declining prices. And unless the Obama Administration’s Making Home Affordable program showed some progress in helping homeowners modify or refinance their troubled loans, foreclosure will continue to wreak havoc on the economy and people’s lives.