In the 23 states were a judge has the final say, the foreclosure pipeline has stalled, compared to the 27 states with a non-judicial and quicker process.
Half of all loan holders in foreclosure in judicial states have not made a payment in more than two years, according to the December Mortgage Monitor report released by Lender Processing Services (LPS). That compares to 28 percent in non-judicial states.
Moreover, foreclosure sale rates in non-judicial states stood at about four times that of judicial foreclosure states in December
But no matter which type of foreclosure proceeding is involved, the overall crisis is dragging on and weighing down on home prices and keeping a housing market recovery from gaining solid footing.
LPS reports that new foreclosures dropped about 40 percent last year, but that sharp decline is attributed to foreclosure freezes and reviews conducted by the top lenders in the wake of the “robo-signing” scandal that broke in late 2010.
Settlement talks between the lenders and 50 state attorneys general continue, with some reports surfacing this past week of a pending $25 billion resolution. But other reports point to discontent among some state leaders. They contend that more relief for wronged homeowners is needed, in addition to more accountability and transparency from the lenders.
A key component of a settlement is whether California Attorney General Kamala Harris will sign on. Thus far, she has called the proposed settlement inadequate. About one-fifth of the nation’s foreclosures are in California.
Now for the good news, according to LPS.
Loans originated over the last two years have proven to be “some of the best quality originations on record,” LPS said.
A result of tighter lending requirements, 2010-2011 loan originations showed 90-day default rates below of all other years – back to 2005.
December origination data also shows that recent prepayment activity – a key indicator of mortgage refinances – has remained strong, with 2008-2009 originations, high credit score borrowers and government-backed loans having benefited the most from recent, historically low interest rates.
The 23 states with court system proceedings are: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.