Magazine article Mortgage Banking

Spotlight on California and Florida-Are There Signs of Life?

Magazine article Mortgage Banking

Spotlight on California and Florida-Are There Signs of Life?

Article excerpt

Prior months' columns have generally focused on national performance trends surrounding delinquency inventories and roll rates. This month we choose to focus on California and Florida--two states that have been major drivers of national delinquency and foreclosure trends.

These heavily populated states contain roughly 20 of the 100 most populous metropolitan statistical areas (MSAs) making them especially of interest. We also wanted to dive into mortgage performance in these more discrete geographic areas to examine whether there are any positive trends starting to take shape in some of the hardest-hit areas. (In the November issue of Mortgage Banking, we focused on home-sale trends in Los Angeles County relative to the pending supply of severely delinquent loans and loans in foreclosure. Those ratios did not appear to bode well, in particular, for the stabilization of foreclosure inventories in higher-property-value homes in Los Angeles).

We compared mortgage performance data as of month-end October 2009 to the prior year. This 12-month analytic time frame allows enough time for trends to evolve and mitigates the magnitude of delinquency seasonality. The data panel we studied included all first mortgages in the LPS Applied Analytics loan-level servicing database (legacy McDash Analytics core product), which includes agency, non-agency, government and whole-loan first mortgages that span the full credit spectrum.

As demonstrated by servicer and government initiatives focused on homeownership preservation, it comes as no surprise that national performance over the past year has worsened--9.4 percent of all loans are delinquent and an additional 3.1 percent are in the process of foreclosure as of the month ending Oct. 31, 2009. What may not be as widely appreciated, however, is that the deterioration has been so pervasive.

In fact, all 50 states and all 100 of the largest MSAs have worse performance status today than they did 12 months ago as measured by many key metrics.

In our state-level analysis, Florida currently ranks first nationally (a dubious victory, certainly) with just under 23 percent of its active loans registering in a non-current status (defined as either at least 30 days past due or in foreclosure).

California is ranked sixth with more than 14 percent of its loans in a non-current status. As an interesting note, California's current loans have average current loan balances of about $273,000 with original FICO [R] scores of 737. …

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