By Mike Colpitts
Homeowners in trouble on their mortgages jumped as more homes joined the long line of defaults in May showing another sign the U.S. economy is weakening, according to real estate analytics company Lender Processing Services. The slim 1.1% monthly jump in defaults is a troubling sign for the U.S. housing market, still struggling to get out of its rut.
But the rate at which homeowners are losing homes to foreclosure or bank assisted short sales has also fallen in the last year, even as bankers pick up the speed at which they are foreclosing on homes. Year over year delinquencies are down 9.6%.
The data, however, is tough news for the housing market, which is in the midst of a record breaking foreclosure crisis. Foreclosure starts increased in May after bankers increased the number of homes they are formally repossessing, according to RealtyTrac. The nation’s five largest banks reached a $25 billion settlement with all but one state attorney general following the robo-signing scandal, and then increased formal repossessions.
The loan delinquency rate, which represents loans that are 30 days or more past due stands at 7.2%, according to figures provided by the firm. The LPS report is taken from the company’s mortgage data index, which tracks about 40 million home mortgages.
The total number of homes that are a month or more late or in foreclosure across the nation is now estimated to be 5.57-million, with Florida, Mississippi, New Jersey, Nevada and Illinois having the highest percentage of non–performing loans.
However, the number of homes with mortgages that are 90 days or more late, considered most likely to be foreclosed, is estimated by LPS analysts to be 1,575,000. Year over year delinquencies are down through May, but the month to month change of homes waiting to be foreclosed is only down one-half of one percent.
However, states that had little subprime or other creative mortgages marketed to mortgage buyers, including ALT-A loans, have the lowest percentage of homes in default, with South Dakota, North Dakota, Alaska, Wyoming and Montana at the top of the list.