Foreclosure starts were 20% higher than the previous month reaching a yearly high, Lender Processing Services said in its latest Mortgage Monitor report.

Despite the increasing number of homeowners who cannot make their mortgage payments, foreclosure starts are still down more than 12% from the same time period last year.

The Jacksonville, Fla.-based firm said out of the nearly four million loans that are either 90 or more days delinquent or in foreclosure, there are about 2.1 million loans in the foreclosure pre-sale inventory.

LPS said this category has minimized to levels not seen since 2008.

Out of the nearly 46 million loans that were current at the end of August, the national loan delinquency rate is down to 8.13%. This is a 2.5% month-over-month difference and 11.8% lower than August 2010.

There are more than 4.2 million properties 30 or more days past due, but not in foreclosure, LPS said. At the same time, there are less than 1.9 million properties 90 or more days late in payments, but not in foreclosure.

LPS said “first-time” delinquencies accounted for approximately a quarter of the total of the U.S. delinquency rate, signaling an improving trend for new problem loans. The data also showed that only 1.4% of the loans became seriously delinquent, which is more than half the peak high of 2.9% in 2009.

Meanwhile, of the 46 million loans that were current through August, 23% were at risk because of negative equity, a sign that could lead a borrower to default, LPS said.

According to the report, more loans are moving from foreclosure back into delinquent status due to increased process reviews and possible loss mitigation activity. This has led to an increase in foreclosure timelines with an average loan in foreclosure remaining delinquent for a record high 611 days.

LPS said it is taking non-judicial states about six months less than judicial states to review delinquent loans at the time of a foreclosure sale.

Based on a combination of foreclosures and delinquencies as a percentage of active loans, the states with the highest percentage of delinquencies are Florida, Mississippi, Nevada, New Jersey and Illinois. States with the lowest percentage of non-current loans are Montana, Wyoming, Alaska, South Dakota, and North Dakota.

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