ONE SOURCE. POW E WERFUL SOLUTIO .

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LPS Mortgage Monitor

November 2012 Mortgage Performance Observations

Data as of October, 2012 Month-end

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October 2012 Focus Points

Focus 1: September delinquency spike reversed in p q y p October; foreclosures down due to National Mortgage Settlement (NMS) Focus 2: Largest YoY house price increase since 2006; low total sales with high % of distressed g Focus 3: Originations still relatively strong despite Sept drop; non government share increasing non-government Focus 4: State specific legislation is impacting foreclosure processes beyond judicial vs non vs. nonjudicial distinction
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Focus 1 Summary: Monthly Mortgage Performance

Delinquencies down; September payment issues related to short month resolved Foreclosure starts down sharply due to NMS; associated drop in foreclosure inventory Longer term DQ and FC trends improving
Delinquencies >30% lower than Jan-10 peak Watch foreclosure activity over the coming months
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DQs in-line with seasonal trends; FCs down almost 7% due to lower starts
Early stage self cures and modification dominated late stage cures drove drop in DQs (Appendix, Slide 18)

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NMS drove a drop in FC starts; expect a rebound in coming months

Settlement requires 14 day notice to borrowers prior to referral; letters were sent in September and October

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Focus 2 Summary: HPI and Home Sales

House prices continue to rise nationally; on pace for 5-7% YoY appreciation by Dec-12 Overall sales volumes remain low with distressed transactions at historic highs O Over th prior 12 months: the i th
4.07 million total transactions REOs = 16.1% (656k) Short Sales = 16.2% (661k)
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LPS HPI up 3.6% year over year 3 6%

National house prices are down 22.8% from the June 2006 peak J k

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Almost one third of all transactions over the prior year were distressed
12 month sales peaked at 8.2 million in Nov-05 (260k distressed)

12 months through Sep-12 g p 4.1 million total sales (1.3 million distressed)

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Focus 3 Summary: Originations and Characteristics

Originations fell in September due to shortened month, but expect a rebound based on October prepayments Non-government originations continue to rise Mortgage spreads continue to be wide; FHA still supporting hi h t risk b till ti highest i k borrowers

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Sept originations dropped with short month; higher Private / Portfolio share
Private / Portfolio Share 2009: 9% 2010: 11% 2011: 13% 2012: 16%

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Mortgage spreads remain elevated; rates consistent across product

138 bps p 197 bps

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Focus 4 Summary: Foreclosure process disparities and impacts

State specific actions / legislation have had significant impact on pipeline ratios
Maryland Hawaii Arkansas and Nevada are Maryland, Hawaii, examples California Homeowners Bill of Rights goes into effect in January

Large differences persist in judicial and nonjudicial foreclosure timelines and inventory over-hang
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Impact of FC reform in NV lower vs. other states; CA to change in Jan-13

NV pipeline ratio has doubled since Oct-11 FC reform law; CA Homeowners Bill of Rights begins Jan-13

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FC inventory in judicial states remains over 3x non-judicial

Seven of the top 10 states for total non-current are judicial (Appendix, slide 17)

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ONE SOURCE. POW E WERFUL SOLUTIO . : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : ONS

November 2012 Appendix

LPS Mortgage Monitor

Data as of October, 2012 Month-end

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October 2012 Data Dashboard

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Seven of the top 10 states for total non-current are judicial

Average year over year change in non-current percent (includes loans 30+ Delinquent or in Foreclosure) Judicial = -5.0% Non-judicial = -10.4%
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Cures jumped with October makeup payments and modifications

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FC sales maintained stable national trend while starts dropped sharply

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Drop in foreclosure starts supported a drop in overall inventory

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Prepayment speeds rebounded in October indicating more originations

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ONE SOURCE. POW E WERFUL SOLUTIO . : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : ONS

LPS Mortgage Monitor

Disclosures: Product / Metric Definitions and July 2012 Market Sizing Revisions

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Disclosure Page: Product Definitions

*Conforming limits do not account for temporary or high-cost area increases.

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Disclosure Page: Metrics Definitions

Total Active Count: All active loans as of month-end including loans in any state of delinquency or foreclosure. Post-sale loans and loans in REO are excluded from the total q y active count. Delinquency Statuses (30, 60, 90+, etc): All delinquency statuses are calculated using the MBA methodology based on the payment due date provided by the servicer. Loans in foreclosure are reported separately and are not included in the MBA days delinquent delinquent. 90 Day Defaults: Loans that were less than 90 days delinquent in the prior month and were 90 days delinquent, but not in foreclosure, in the current month. Foreclosure Inventory: The servicer has referred the loan to an attorney for foreclosure. L f l Loans remain i f i in foreclosure i l inventory f t from referral t sale. f l to l Foreclosure Starts Any active loan that was not in foreclosure in the prior month that moves into foreclosure inventory in the current month. Non-Current: Loans in any stage of delinquency or foreclosure. y g q y Foreclosure Sale / New REO: Any loan that was in foreclosure in the prior month that moves into post-sale status or is flagged as a foreclosure liquidation. REO: The loan is in post-sale foreclosure status. Listing status is not a consideration, this includes all properties on and off the market market. Deterioration Ratio: The ratio of the percentage of loans deteriorating in delinquency status vs. those improving.
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With the June 2012 month-end data LPS has updated its month end data, extrapolation methodology to incorporate, among other things, improved estimates of market size, which includes higher hi h coverage of government and subprime products and f t d b i d t d increases LPS estimate of the total first lien residential mortgage market by three percent to 50.4 million. To ensure consistency in trend analysis, the new methodology has been applied to all historical data and previously reported mortgage performance statistics have been adjusted accordingly. The following section contains information on market coverage and comparisons with previously reported statistics. Additional information is available upon request.
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The new scaling increases overall estimated industry loan count by approximately 1.2 million loans

Prior industry estimates declined because scaling didnt support current servicing transfer volumes

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New scaling reflects the higher coverage of government loans and allows for the incorporation of new servicers

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Delinquencies decline based on higher estimated coverage of FHA and subprime loans.

Converge due to new servicers and transfer issues with prior scaling

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Foreclosure inventory remains almost identical, but shifts up in recent months as transfer bias is repaired

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Foreclosure starts remain consistent, with rates shifting up slightly

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Performance Statistics Changes: Database Counts

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Performance Statistics Changes: State Level Detail

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