Lender Processing Services, a technology firm that reports on loan delinquencies, says that its data – based on 40 million first loans and 5 million home equity loans and lines of credit — points to an escalation in prime loan delinquencies across the U.S.
According to LPS analyst Steve Berg, there is a huge inventory of delinquent loans and more deteriorating every day. Using 2005 as a base year, LPS says that prime loans have deteriorated 305 percent, which outpaces subprime loans at 230 percent and FHA loan delinquencies, which have been flat.
From a post at Inman.com:
Berg uses Los Angeles County, home to a significant number of very high-priced residences, as an example. Looking at the data at the end of last year, the number of “dirty sales,” either short sale or REO, as a percentage of all total sales in the $250,000-and-below bracket, reached as high as 78 percent. However, the number of homes in that bracket that were in default or foreclosure was relatively modest, meaning the pipeline was shrinking.
In the lower-price home bracket where short sales and REOs had been concentrated, prices are not going to drop much more because it is already totally saturated with REOs and short sales — and the damage has been done.
As a comparison, in the highest price band, $750,000 and greater, only 16 percent of transactions were dirty sales. But, the number of properties in default and foreclosure are now higher than in the low-priced bracket and that, says Berg, “is going to whipsaw the home-sale market.”
The five states with highest volume of prime jumbo loans outstanding were California, New York, Florida, Virginia and New Jersey. Together those five states represent about two-thirds of total delinquencies.