Thursday, November 07, 2013

MBA National Delinquency Survey: Judicial vs. Non-Judicial Foreclosure States in Q3 2013

by Calculated Risk on 11/07/2013 06:24:00 PM

Earlier I posted the MBA National Delinquency Survey press release and a graph that showed mortgage delinquencies and foreclosures by period past due. There is a clear downward trend for mortgage delinquencies, however some states are further along than others. From the press release:

“The degree to which the mortgage delinquency and foreclosure problem has changed over the last five years is perhaps best illustrated by the fact that last quarter New Jersey led the nation in the increase in the percentage of foreclosure actions filed, followed by Delaware, Maryland and Indiana. While Florida still leads the nation in the percentage of loans in foreclosure, that percentage is falling. In contrast, New York and New Jersey were the only two states that saw an increase in the percentages of loans in foreclosure,” said Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Education. ... States with judicial foreclosure systems still account for most of the loans in foreclosure.
MBA In-foreclosure by stateClick on graph for larger image.

This graph is from the MBA and shows the percent of loans in the foreclosure process by state. Posted with permission.  Blue is for judicial foreclosure states, and red for non-judicial foreclosure states.

The top states are Florida (9.48% in foreclosure down from 10.58% in Q2), New Jersey (8.28% UP from 8.01%), New York (6.34% UP from 6.09%), and Maine (5.44% down from 5.62%).  Nevada is the only non-judicial state in the top 10, and this is partially due to state laws that slow foreclosures.

California (1.42% down from 1.64%) and Arizona (1.26% down from 1.51%) are now far below the national average by every measure.

Judicial vs. non-Judicial statesFor judicial foreclosure states, it appears foreclosure inventory peaked in Q2 2012 (foreclosure inventory is the number of mortgages in the foreclosure process).  Foreclosure inventory in the judicial states has declined for five consecutive quarters.  This was three years after the peak in foreclosure inventories for non-judicial states.

It looks like the judicial states will have a significant number of distressed sales for a few more years - however the non-judicial states are closer to normal levels.