Foreclosure inventory in November fell as requirements from the national mortgage settlement “influence the pace of first-time foreclosure starts, Lender Processing Services (LPS) stated in a recent report.

Foreclosure inventory shrunk to 3.51 percent in November, a near 10 percent decline from September 2012. In February, state and federal official reached a settlement with five of the nation’s largest servicers—Ally, Bank of America, Citi, JPMorgan Chase, and Wells Fargo—over allegations of abusive foreclosure practices.

LPS explained the settlement requires servicers to provide a 14 day notice before referring borrowers to foreclosure, and the letters were sent starting in September.

Foreclosure starts totaled 130,053 in November 2012, a 4.6 percent month-over month increase and a 27.6 percent yearly decrease.

As servicers get up to speed on settlement requirements, LPS stated it “expects foreclosure starts to rebound as mortgage servicers incorporate the new procedural requirements into their operations in the coming months.”

LPS also reported delinquencies have risen about 15 percent in areas impacted by Hurricane Sandy. For example, since August 2012, the delinquency rate in New Jersey has increased 15.2 percent to 8.41 percent, while Connecticut and New York have seen increases of 15.4 percent and 14.8 percent, respectively, during the same time period. Overall, the national delinquency rate stood at 7.12 percent in November and increased just 3.7 percent since August 2012.

Judicial states continue to host a larger share of non-current loans (30-plus delinquencies and foreclosures). Out of the top 10 states with the highest rate of non-current loans, seven were categorized as having a judicial process.

The seven states were Florida, New Jersey, New York, Illinois, Maryland, Louisiana, and Connecticut.