The February Mortgage Monitor report released by Jacksonville, Fla.-based Lender Processing Services (LPS) found an increase in loan ‘cure’ rates (those loans that were delinquent in the prior month and are now current). The majority of cures were on loans one-to-two months delinquent, with approximately 500,000 loans curing in February alone.
According to LPS Applied Analytics Senior Vice President Herb Blecher, these cures were not unusual. However, rises seen in loans three-to-five months delinquent and foreclosure-initiated categories were unexpected.
‘Historically, we see these seasonal increases in cure rates in February and March each year,’ Blecher says. ‘What stood out in this month's data was where that increase was centered. February's rise in cures was driven almost entirely by Federal Housing Administration (FHA) loans, representing a 29 percent increase from January, and likely driven by revived modification activity related to the revisions to the FHA's Loss Mitigation Home Retention options released late last year.’
Additionally, LPS' February data showed that recent increases in mortgage rates have led to a decline in prepayment rates, historically a good indicator of refinance activity. The total U.S. loan delinquency rate stood at 6.8%, while the total U.S. foreclosure pre-sale inventory rate was 3.38%.