If the top-20 servicers are turning over their distressed loans at a 3.9% clip, that’s a 25-month supply on average (and a boatload of free rent!). From HW:
Analysts modeled liquidation speeds of servicers across four different loan categories using the Conditional Liquidation Rate since April 2010.
The CLR is a model that includes the amount of liquidated loans divided by the aggregated balance of all outstanding mortgages in either 60-day delinquency or worse. That includes 90-day delinquency, foreclosure and REO.
Record-high distressed housing inventory has attracted a lot of investor attention to servicers’ loss-mitigation strategy. With the government’s Home Affordable Modification Program and the Home Affordable Foreclosure Alternatives program reducing principal, interest and even short selling a home, investors are making adjustments based on the speeds these loans are worked out.
For subprime mortgages, Carrington is the fastest servicer to liquidate loans in the distressed pipeline. Homecomings Financial and HomEq, which was recently bought by Ocwen, made up the top-three.
According to Deutsche, Carrington, which rents out its REO properties, has traditionally been the slowest to liquidate these loans. But as of August 2010, the REO rate at Carrington reached 21.9% compared to 3.9% for the rest of the top-20.
Wilshire Credit Corp. used to hold the fastest liquidation speeds, but it is slowest since April. The serious delinquency rate on the Wilshire portfolio has increased to 65% compared to 40.7% for the rest of the subprime servicers. This, according to Deutsche, could be because the recent merger of the Bank of America and Wilshire servicing platforms.
BofA, and its acquired Countrywide operation, were among the slowest in each category.
For Alt-A servicers, EverHome Mortgage Company, PNC Mortgage and SunTrust Mortgage had the top-fastest liquidation rates.
Of Option-ARM servicers, Litton Loan Servicing, GMAC Mortgage, and Central Mortgage were ranked in the top-three.
And for Jumbo mortgages, ABN AMRO Mortgage Group, IndyMac Mortgage Services and PNC were the fastest.