According to Lender Processing Services Inc.’s (LPS) Monthly Mortgage Monitor, the spread between loans that are improving and loans that are deteriorating grew to the widest it’s been since November 2008. The deterioration ratio, which compares deteriorating loans against improving loans, stood at 277%. The highest deterioration rates occurred in Nevada, Arizona, Hawaii and California.
The LPS report also shows that servicers are targeting loss mitigation action on those loans that require the most urgent attention. Almost 90% of modifications happened on loans that are at least 90 days past due but that have not been referred to an attorney for foreclosure. The percentage of modifications for 30- and 60-day buckets has remained fairly static since December 2008. Servicers are reluctant to foreclose, as foreclosure starts increased but foreclosure sales remained low, despite the expiration of mortatoria.