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LPS: Early-Stage Delinquencies Drive Up September Total

Mortgage loan delinquencies increased 7.72 percent from August to September--the largest monthly increase since 2008, according to a report from ""Lender Processing Services"":http://www.lpsvcs.com/Pages/default.aspx (LPS).

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The upturn was substantial, even for a month historically marked by seasonal rises in delinquency, LPS said in a release accompanying its September Mortgage Monitor report. However, company analysts say it is important to look at the longer-term trend.

""September's increase in the delinquency rate was indeed significant, but the overall trend is still one of improvement,"" said Herb Blecher, SVP of LPS' ""Applied Analytics"":http://www.lpsvcs.com/Divisions/AppliedAnalytics/Pages/default.aspx division. ""Despite the monthly jump, delinquencies are down 30 percent from their January 2010 peak, and our analysis revealed some interesting factors related to the spike.""

The total percentage of non-current loans at the end of September was 7.40 percent, representing about 5.64 million loans.

Most of the increase in overall delinquency can be attributed to a rise in early-stage delinquencies, according to the report. The number of delinquencies between 30 and 60 days increased from 1.37 million in August to 1.59 million in September. Meanwhile, the number of seriously delinquent (90-plus) day loans rose by about 15,000 to 1.53 million.

A shortened transactional period may also be to blame for missed payments. September had only 19 business days, down from August's 23. As a result, transaction levels fell month-to-month across most categories.

""September 2012 was notable in its short duration of business days and virtually all transactional or operational metrics we observed declined in volume for the month; foreclosure starts, foreclosure sales, delinquent cures and loan prepayments all dropped from their August levels,"" Blecher said.

For all the negative news, there were a few positive points. For one thing, Blecher noted that re-defaulting modifications contributed a smaller portion to the overall delinquency rate than they did one month prior.

In addition, newly available data from August showed originations were up 13.2 percent month-over-month and 42.1 percent year-over-year, reaching their highest point since mid-2009. In addition, loan activity under the Home Affordable Refinance Program (HARP) showed a marked increase, with HARP originations making up nearly a quarter of August's total origination volume.

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