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Sunday, June 19, 2011

NY Times on Backlog of Foreclosures

by Calculated Risk on 6/19/2011 09:27:00 AM

From David Streitfeld at the NY Times: Backlog of Cases Gives a Reprieve on Foreclosures

In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.

Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.

In the 27 states where the courts play no role in foreclosures, the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases ...
Of course, because the denominator has declined - and the numerator is still very high - these time frames seem absurd. As an example:
Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286.
So in New York, with 213,000 homes in severe default or foreclosure, and only 286 completed foreclosures per month, gives a backlog of 62 years.

Some of this is due to process delays for some lenders. Some is because lenders are trying to modify more loans. Some is because the lenders already have plenty of REOs (Real Estate Owned).

It won't take anything like 62 years to clear the backlog, but it does show there is a long way to go.

Note: This doesn't quite fit with the recent reports that Fannie, Freddie and the FHA are all completing foreclosures (and selling REO) at a record pace right now ...