Bloomberg News

Foreclosures Worsen in New York, New Jersey as Arizona Improves

January 09, 2012

Jan. 6 (Bloomberg) -- The number of homes in the foreclosure pipeline is increasing in states including New York, New Jersey and Connecticut, where the process is slowed by courts, as Arizona, California and Nevada digest their backlog.

Home loans that were delinquent or in foreclosure fell in three states hit hard by the housing market collapse, dropping 19 percent in Nevada, 21 percent in California and 25 percent in Arizona in the year through Nov. 30, Lender Processing Services Inc. reported today. At the same time, they rose 7.4 percent in New Jersey, 5.2 percent in Connecticut and 2 percent in New York, as mandatory judicial procedures delayed seizures.

It’s “a tale of two countries,” Herb Blecher, senior vice president at LPS Applied Analytics, a unit of the Jacksonville, Florida-based mortgage-services company, said in a telephone interview from Denver. “There are certainly two different scenarios that can play out.”

The pace of foreclosures slowed in the past year in so- called judicial states after banks and loan servicers faced investigations over documentation procedures used to seize property. Speedier foreclosures may allow housing markets to recover faster while not giving homeowners as much opportunity to stop the repossession of their properties, Blecher said.

The 24 judicial states include Florida, where 23 percent of homes with a mortgage were delinquent or in foreclosure, the most of any state, Lender Processing Services said. The state also took the longest to foreclose, with an average of 1,017 days of delinquency in November, followed by Maine, New York, Vermont and New Jersey, all judicial states.

Sold at Auction

The average U.S. loan was 667 days delinquent when a foreclosure sale was held. The average was 839 days for judicial states and 587 for non-judicial states. Homes sold in foreclosure auctions were an average of 659 days delinquent in California, 629 days in Nevada and 541 days in Arizona, where court approval isn’t needed.

Federal Reserve Chairman Ben S. Bernanke this week called the weakness in the housing market a “significant barrier” to U.S. economic health and said Fannie Mae and Freddie Mac, the government sponsored enterprises that control the majority of mortgages, might have to bear greater losses to stoke a broader recovery.

“The large inventory of foreclosed or surrendered properties is contributing to excess supply in the for-sale market, placing downward pressure on house prices and exacerbating the loss in aggregate housing wealth,” he said in a Jan. 4 report to congressional leaders.

The U.S. delinquency rate fell to 7.7 percent in November for mortgages more than 90 days late, compared with 8.2 percent a year earlier, according to Lender Processing Services. The total number of loans that were delinquent or in foreclosure fell to 6.26 million, down 24 percent from their January 2010 peak. The number of homes that had received a foreclosure notice and were awaiting seizure by a bank was 2.12 million, little changed from a record 2.22 million in March.

--Editors: Daniel Taub, Christine Maurus

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net


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