The April Mortgage Monitor report from Lender Processing Services shows that while overall foreclosure starts were down 2.6% in April, Federal Housing Administration (FHA) foreclosure starts spiked significantly, jumping 73% during the month. LPS says the rise was driven primarily by defaults in 2008 and 2009 vintage loans, though all FHA vintages saw increases in foreclosure starts in April.
‘In 2008, when the loan origination market virtually dried up, the FHA stepped in to fill the void,’ says Herb Blecher, senior vice president for LPS Applied Analytics. ‘FHA originations tripled that year, and increased to five times historical averages in 2009. High volumes like that, even with low default rates, can produce larger numbers of foreclosure starts. That represents a lot of loans to work through – the 2008 vintage alone represents some $14 billion of unpaid balances in foreclosure, and the overall FHA foreclosure inventory continues to rise.’
The April data also showed that foreclosure sales continue to remain low nationally, decreasing 2.6% month-over-month, and with volume that remains about one-third that of foreclosure starts. Foreclosure sales in non-judicial states dropped 2%, and those in judicial states remained basically flat, down just 0.01% over the month.
According to LPS, the states with highest percentage of non-current loans were Florida, Mississippi, New Jersey, Nevada and Illinois. The states with the lowest percentage of non-current loans were Montana, Alaska, South Dakota, Wyoming and North Dakota.