The July Mortgage Monitor report released by Lender Processing Services (NYSE: LPS) found that while loan origination volume had slowed slightly from May to June, overall activity remained relatively strong. According to LPS Data & Analytics Senior Vice President Herb Blecher, prepayment activity (historically a good indicator of mortgage refinances) is still largely driving origination volume, as has been the case for some time now.

“Prepayment speeds have been impacted by the sharp increase in mortgage interest rates we’ve seen over the last couple months,” Blecher said. “However, even with that increasing interest rate pressure, July’s monthly prepayment rates are still about where they were this time last year, when rates were at historic lows. In fact, they are roughly at the same levels as the heights of the ‘mini refinance booms’ in 2010 -- when interest rates were comparable to where they are today -- and in 2009, when rates were even higher. Of course, as interest rates continue to climb, we can expect that both prepayments and associated originations will decline. It’s notable however, that we saw an increase in prepayment activity in July among higher loan-to-value (LTV) mortgages -- those with LTVs of 100 percent or more -- indicating continued HARP refinance activity.

“With that in mind, we also looked at the delinquency rate for what are likely to be HARP loans 12 months after origination,” Blecher continued. “We found that while delinquencies were higher than “traditional” (sub-80 percent LTV) GSE loans -- at approximately 1.2 percent -- this group is performing better than both pre-crisis GSE loans and post-crisis FHA loans (which both averaged 4 percent delinquency rates at 12 months of age). Overall, the data shows that the strong downward trend in delinquencies and foreclosures continues nationwide, with a decrease in foreclosure starts contributing to this improvement. For the year to date, 2013 has produced the lowest level of foreclosure starts since 2007. Given that nearly 50 percent of these are repeat foreclosures means that the picture is even more positive than a surface reading of the numbers might suggest.”

This month’s Mortgage Monitor also leveraged residential real estate transaction data from the LPS Home Price Index to examine trends associated with distressed sales and found that these too were on the decline. For the 12-month period ending in June 2013, distressed sales overall (including both REO and short sales) were down nearly 30 percent from the same period ending in June 2012 -- from 650,000 to 463,000. Of these, short sales had declined significantly -- by nearly 60 percent -- accounting for just over 46,000 sales during that timeframe as compared to 104,000 in 2012.

As reported in LPS' First Look release, other key results from LPS' latest Mortgage Monitor report include:

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Totals are extrapolated based on LPS Data & Analytics' loan-level database of mortgage assets.

To view the Mortgage Monitor Snapshot, LPS' video version of the Mortgage Monitor, go to
http://www.lpsvcs.com/LPSCorporateInformation/MultimediaLibrary/Pages/Video-Library.aspx?ListName=Video&ItemName=MMJuly3.wmv

About the Mortgage Monitor

LPS manages the nation's leading repository of loan-level residential mortgage data and performance information on nearly 40 million loans across the spectrum of credit products. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for LPS' monthly Mortgage Monitor Report. To review the full report, visit http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/Pages/Mortgage-Monitor.aspx

About Lender Processing Services

Lender Processing Services delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk. These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry’s leading loan-servicing platform. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries. LPS is a Fortune 1000 company headquartered in Jacksonville, Fla., and employs approximately 7,500 professionals. For more information, please visit www.lpsvcs.com.