LPS Data Shows Long Delays in Foreclosure Process

The specter of  shadow inventory looming in the background of the housing crisis may be even worse than anticipated according to data released Monday by Lender Processing Services (LPS). 

The February Mortgage Monitor report indicates that, while delinquencies continue to decline, there is an enormous backlog of foreclosures in the pipeline that may be as great as 30 times the monthly sales volume of already foreclosed homes.  This implies foreclosed homes will continue to come on the market for many years into the future, continuing downward pressure on home prices in the hardest hit areas thanks to an abundance of vacant and often deteriorating housing units.  

While there have been occasional spikes over the last year, the February Mortgage Monitor report shows that both delinquencies and foreclosures starts have declined steadily over the last year.  Foreclosure starts in March 2010 numbered 250,174; there were 204,916 starts in February 2011 (a decrease of 0.2 percent from January) and the delinquency rate over the same 12 month period has declined from 9.66 percent to 8.80 (down 1.2 percent from January.)   However the backlog of foreclosures in the pipeline has continued to expand.  There are 6.86 million mortgages in some state of delinquency or foreclosure nationwide, an 8.80 percent delinquency rate, and 2.17 million of those loans are 90+ days delinquent and 2.2 million are in foreclosure.  In March 2010 there were 7.3 million delinquent mortgages with 2.87 million 90 days or more delinquent and 1.99 million in foreclosure. 

A major reason for the backlog is the steadily increasing amount of time loans are spending in the foreclosure pipeline.  The average time a loan in the 90+ day bucket has been delinquent by February was 351 days and those in foreclosure had been delinquent for 537 days.  In January 2011 those figures were 344 and 523 respectively and 12 months earlier, in March 2010, the figures were 278 and 426 days. A full 30 percent of loans in foreclosure have not made a payment in over two years.

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Source: http://www.mortgagenewsdaily.com/03292011_shadow_inventory_option_arms.asp

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