Foreclosure Timeline Lengthened by 140 Days Over Past Year: LPS

Mortgages backing homes that were foreclosed on in September had been delinquent for an average of 624 days, according to ""Lender Processing Services"":http://www.lpsvcs.com (LPS). That's up from 484 days in September of last year, just before the processing issues surfaced.

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That 624-day foreclosure timeline is the national average. LPS says timelines in judicial states continue to extend at a greater rate. The time from last payment made to foreclosure sale in judicial states is 761 days, which is six months longer than in non-judicial states.

Consequently, ""the company's study"":http://www.lpsvcs.com/LPSCorporateInformation/ResourceCenter/PressResources/MortgageMonitor/201109MortgageMonitor/LPSMortgageMonitorSeptember2011.pdf shows foreclosure sales in judicial foreclosure states remain very low, with only 1.6 percent of their foreclosure inventories moving to sale. The slow pace of liquidation has caused the foreclosure pipeline to balloon, with nearly seven percent of the entire active loan count in judicial states in foreclosure.

Ranked by the percentage of loans that are non-current, seven of the top 10 states are judicial foreclosure states: Florida, New Jersey, Illinois, Ohio, Indiana, Louisiana, and Maryland. Non-judicial states making LPS' top-10 list include Mississippi, Nevada, and Georgia.

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Looking at the national foreclosure population, LPS says almost 40 percent of loans in foreclosure have not made a payment in two years, and 72 percent have not made a payment in a year or more.

Overall, foreclosure starts in September were slightly below the three-year average, LPS reports. Servicers initiated foreclosure on 220,273 homes during the month, down 11 percent from the prior month and 15 percent from a year earlier.

New problem loan rates have increased sharply over the last two months, with 1.6 percent of loans that were current six months ago now 60 or more days delinquent or in foreclosure. LPS says the “sand states” and the Midwest have the highest new problem loan rates.

The company reports that delinquencies are now almost 2x and foreclosures are 8x their pre-crisis levels.

LPS says modification volumes have been falling since June of last year and are continuing to head south. About 2 million mortgage modifications have taken place since January 2010.

On the plus side, modification attributes have changed significantly since the beginning of the housing crisis. From the beginning of 2010, the percentage of mods resulting in payment reductions has held fairly steady at close to 90 percent.

As a result, the performance of modified loans has improved. LPS data show that the percentage of modified loans 60 or more days delinquent after at least 12 months stood at about 24 percent during the second quarter of this year, compared to a redefault rate above 50 percent in early 2009.