Half a million bad mortgages got better or foreclosed in first quarter

Lender Processing Services [stock LPS][/stock] said 500,000 ailing mortgage borrowers either came current on their payments or lost their home to foreclosure in the first quarter, according to a recent mortgage monitor from the Florida-based data provider. Those mortgages are supported by “seasonal trends” that supported large increases in cure rates. However, the numbers also show the volume of foreclosures continues to rise with the inventory as of March 31 at 2.2 million, which 33% higher than the end of February and an all-time high. Foreclosure sales rose significantly in March as well, “suggesting that the halt in activity due to various moratoria may be passing,” according to LPS. “New problem loan rates are at a three-year low as fewer loans are going bad,” but the pipeline is “still bloated with overhang at every level.” That overhang includes three times the number foreclosure starts as foreclosure sales. Overall foreclosures are down 19.4% from a year ago and foreclosure starts are up 8.2%. Delinquencies ended the first quarter 12% lower than the end of 2010. The buying of houses is also being restricted by logistics. Origination activity dropped off early this year due to much stricter underwriting, the report states. And the cautious origination strategy appears to be reasonable as recent vintages are performing exceptionally well. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.