Certain nonjudicial states are beginning to experience the foreclosure pipeline problems that have bedeviled judicial states, according to a new report by Jacksonville, Fla.-based Lender Processing Services.
‘On average, pipeline ratios – the rate at which states are currently working through their existing backlog of loans either in foreclosure or serious delinquency – are almost twice as high in judicial states than nonjudicial states,’ says LPS Applied Analytics Senior Vice President Herb Blecher. ‘At today's rate of foreclosure sales, it will take 62 months to clear the inventory in judicial states as compared to 32 months in nonjudicial states. A few judicial states – New York and New Jersey in particular – have such extreme backlogs that their problem-loan pipelines would take decades to clear if nothing were to change.
‘More recently, certain nonjudicial states, such as Massachusetts and Nevada, have enacted 'judicial-like' legislative and/or legal actions, which have greatly extended their pipeline ratios," Blecher adds. "Nevada's 'time to clear' has extended from 27 months in January 2012 to 57 months as of January 2013. The change in Massachusetts has been even more pronounced. Since June of last year, its pipeline ratio has gone from 75 to 171 months. As California's recently enacted Homeowner Bill of Rights is closely modeled on the Nevada legislation, we'll be watching that state closely over the coming months to gauge its impact as well.’
LPS reports that as of January, the total U.S. loan delinquency rate stood at 7.03%, a 2.03% drop from December 2012. The states with the highest percentage of noncurrent loans were Florida, Mississippi, New Jersey, Nevada and New York.