Question-and-Answer Session
Operator
(Operator Instructions)
Our first question comes from Bob Napoli. You may ask your question. Please state your company name.
Bob Napoli - Piper Jaffray
Piper Jaffray. And good morning and congratulations. I think it looks like a lot of questions, but the numbers look pretty good to us. A question first of all on delinquencies and advances. And I think you guys did mention at some point, but clearly there is some seasonal benefit that you get in the first quarter. And I just would like to hear your view on where you see advances going. And I know you gave us on your slide here a big reduction in the delinquent loans, I think, on page 4 in the month of April. But I was hoping if you could give a little more color on where you see delinquencies and advances going over the next several quarters?
Bill Erbey
First of all, Bob, start with the last question, which relates to where do you see advances going. We can't give a forward-looking statement, but we'll give you the mechanics of what occurs. Advances are a lagged effect of delinquencies. As delinquencies begin to rise, you have more and more delinquencies going in the early part of the bucket, and those have very nominal advances against them since the loan is only one month delinquent. It has one month of P&I.
As the advances begin to turn down by their very nature, the average age of a delinquency is older. It has many more months of delinquency. It may affect even the REO, et cetera, and has much higher advances associated with it.
So, you saw that on the way up where advances lag behind the increase in delinquencies. And on the way down, you are going to see advances lag behind the decline in delinquencies with regard to that. So, you've seen a very nominal increase in advances in the first quarter, and that's really reflective of slide 4 where you've seen quite a dramatic decrease in the delinquencies in our book of business.
With respect to the seasonal effect, yes, there is definitely a seasonal effect in delinquencies whether it would be in mortgages or credit cards or auto. The level of activity that occurred in the servicing group to create that change, I think very, very little of that would be described as seasonal effects.
I mean our best information is that almost every other servicer in sub-prime land has continued to see an increasing rise in delinquencies over that period in spite of the seasonal effect. So, I think that really relates to the operational strength of Ron's operation in terms of being able to reduce delinquencies. We are not forecasting any change in that trend with respect to delinquency, the numbers of loans that are delinquent.
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