LPS report also shows increases in early delinquencies

The number of homeowners who were 90 days or more late on their mortgages or in the foreclosure process continued to ease during May, but inventories of bank-owned properties grew for the fifth month in a row, according to the latest statistics collected from loan servicers by Lender Processing Services.

'Real estate owned,' or REO inventory -- properties repossessed by lenders -- stood at 1.13 million, up less than 1 percent from April, but a 21.2 percent increase from a year ago, LPS said.

In addition, 30- and 60-day delinquencies both posted increases from April to May as seasonal improvements in early-stage delinquencies tapered off, ensuring a steady stream of homes will continue to flow into the foreclosure pipeline.

The latest LPS Mortgage Monitor report showed that the average number of days for a loan to move from 30 days delinquent to foreclosure sale continues to increase, to an all-time high of 449 days, meaning that many homes whose owners are newly delinquent won't hit the market for a year or more.

The number of borrowers behind by one mortgage payment grew by 10.1 percent from April to May, to 1.62 million, down 6.4 percent from a year ago and off 9.3 percent from February, when 30-day delinquencies hit a peak for the year at 1.79 million.

Another 658,121 homeowners were 60 days behind on their payments in May, up 4.4 percent from April but down 12.5 percent from a year ago. This year's peak in 60-day delinquencies was recorded in January, when LPS estimates 812,211 homeowners were two months behind on their payments.

The number of borrowers 90 days or more behind on their payments was down 3.5 percent from April to May, to 2.28 million. It was the fourth consecutive month-to-month decline in 90-day delinquencies, which nevertheless remained 32 percent above levels seen at the same time a year ago.

Deterioration ratios increased, with 2.5 loans rolling to a 'worse' status for every one that improved. The number of delinquent loans that 'cured' to a current status declined for every stage of delinquency, with the exception of loans behind by six months or more, where the Home Affordable Modification Program (HAMP) was thought to have helped cure rates.

The number of homeowners in the foreclosure process fell less than 1 percent from April to May, to 1.7 million, which represents an 11.3 percent increase from a year ago. The number of homeowners in foreclosure has declined three months in a row.

Total non-current loans -- mortgages delinquent by 30, 60 or 90 days, or in foreclosure -- grew by 1.4 percent from April to May, to 6.26 million, up 9 percent from a year ago.

LPS estimated that 12.38 percent of all U.S. mortgages were delinquent (9.2 percent) or in foreclosure (3.18 percent).