Black Knight Financial Services said
today that the rate for mortgage delinquencies of 30 days or more, which does
not include loans in foreclosure, rose by a 0.26 percent in December to 6.47
percent. The company's Mortgage Monitor for December and year-end
2013 noted that despite the slight monthly increase the rate fell 9.85 percent
from December 2012 to December 2013 bringing delinquencies down to about the
same rate as they were in early 2009 and about 1.5 times the historic
delinquency rate. There were 3.24
million properties with mortgages delinquent by 30 days or more in December and
1.28 million of those were at least 90 days overdue.
Black Knight is the former Lender
Processing Services. LPS was acquired and
renamed by Fidelity National Financial on January 2. Fidelity is the nation's largest provider of
title insurance through its ownership of Fidelity National Title, Chicago
Title, Commonwealth Land Title, and Alamo Title. Fidelity also holds majority interest in American
Blue Ribbon Holdings, owner and operator of several restaurant companies
including O'Charley's, Ninety Nine, Village Inn and Max & Erma's and has
the controlling stake in Remy International, a designer, manufacturer,
remanufacturer, marketer and distributor of aftermarket and original equipment
electrical components for automobiles, light trucks, heavy-duty trucks and
The foreclosure pre-sale inventory
(loans for which the formal foreclosure process has been initiated), fell 27.9
percent from the previous December and is at a current rate of 2.48 percent.
This is still more than four-and-a-half times the "normal" foreclosure rate but
at the peak the rate was more than eight times the historic norm. The month-over-month decline was 0.74
percent. A total of 1.24 million
properties are in that inventory.
Foreclosure starts were down 23 percent from levels a year earlier. Black Knight said that properties in
foreclosure have been delinquent for an average of 920 days.
"In many ways, 2013 marked an abatement
to crisis conditions in the U.S. mortgage market," said Herb Blecher, senior
vice president of Black Knight Financial Services' Data & Analytics
division. "Delinquencies neared pre-crisis levels, foreclosure inventory
declined 30 percent over the year, new problem loan rates improved in both
judicial and non-judicial foreclosure states, and foreclosure starts ended the
year at the lowest level since April 2007. Despite a recent drop off, 2013 was
also the best year for property sales since 2007, with totals through November
outnumbering the full year totals for each of the prior three years. In
addition, as we've noted before, due to stricter underwriting, 2013
originations have proven to be the best-performing loans on record.
At the same time, Blecher noted that
mortgage originations fell to the lowest levels since 2008 as higher interest
rates seemed to have ended the refinancing wave of the last several years. Even as rates pulled back again toward the
end of the year refinancing remained low.
He said that going forward opportunities for new originations will likely
come from looser underwriting and/or home equity lending which has shown a
sizable increase in volume since 2012.
Black Knight notes that underwriting
criteria remains very strict although most originators eased off a little in
2013. "Looser" standards are primarily
focused on the refinancing population where average credit scores have steadily
declined and loan-to-value ratios ratcheted up.
Home sales in 2013 were the
strongest since 2007. National home
prices also continued to improve but home values in states where a non-judicial
foreclosure process is the norm are recovering faster than in judicial states. Of course as prices are rising faster the
level of negative equity is also shrinking more rapidly in non-judicial
"On the home price front, while national
levels rose 8.5 percent year-over-year through November 2013, we did see home
prices in judicial states generally recovering at a slower pace than their
non-judicial counterparts," Blecher said.
"A similar situation existed with
regard to negative equity improvement, which also occurred more slowly in those
areas with extended foreclosure processes. With 75 percent of loans that are
either seriously delinquent or in foreclosure being 'underwater,' the
resolution of these inventories in many regions (and the speed at which that
has occurred) has had a pronounced effect on reducing overall negative equity
numbers." New problem loan rates also occurred
with greater frequency in judicial states.
The December 2013 data also showed that,
even in most states with judicial or legislative slow-downs, foreclosure
pipelines have been clearing over the last half of 2013. Massachusetts, for
example, has seen its pipeline ratio decline by 49 percent since June, while
New York and New Jersey have come down 39 and 37 percent, respectively. On the
other hand, California - which enacted its Homeowner Bill of Rights at the
start of 2013 - has seen its pipeline ratio increase by 36 percent in the last
six months. Overall, judicial states' foreclosure inventories remain 3.5 times
as large as those in non-judicial states.