The foreclosure pipeline has never been more crammed, with lenders attempting to push 2.2 million homes through the process as of the end of October, according to a monthly report issued today by Lender Processing Services Inc.
Foreclosure starts jumped 5.7 percent from September to October, to 232,865, LPS said. But the report also showed significant improvement in the long-term outlook for foreclosures.
The number of borrowers who were behind on their loans by at least 90 days but who were not yet in foreclosure at the end of October dropped by nearly 19 percent from January, to 1.76 million. That’s a 42.5 percent drop from a peak of 3.06 million in January 2010.
Compared to January, the number of homeowners behind by just one payment also dropped 7.4 percent, to 1.66 million, and 60-day delinquencies were down 11.8 percent, to 665,804.
Delinquencies of all types (30-day, 60-day and 90 days or more) were down 13.6 percent from January to October, to 4.08 million, while the number of homes in foreclosure increased by less than 1 percent.
The number of homes that were either in the foreclosure process or delinquent by 90 days or more fell 9.2 percent, to 3.97 million in October.
One reason the foreclosure pipeline is so full is that it’s taking so long for lenders to begin foreclosure proceedings on seriously delinquent loans, and also to move homes through the process after an initial foreclosure notice is filed.
Homeowners who were behind on their payments by 90 days or more were 388 days delinquent, on average, in October, compared to an average 344 days in January 2011 and 257 days in January 2010.
Homeowners in foreclosure in October hadn’t paid their mortgage for 631 days, on average, compared to 523 days in January 2011 and 410 days in January 2010.
In judicial foreclosure states where courts handle foreclosure proceedings, the "robo-signing" scandal has slowed both initial foreclosure filings and the foreclosure process itself.
LPS said foreclosure sale rates in nonjudicial states have been proceeding at four to five times that of judicial.
The top 10 states with the largest year-over-year decline in noncurrent loans percentages were all nonjudicial foreclosure states, as lenders in those states have been more able to move seriously delinquent loans into foreclosure.
Meanwhile, foreclosure starts actually declined in October in nonjudicial foreclosure states, suggesting lenders have largely worked their way through backlogs.
Loans originated in 2010 and 2011 are some of the best-performing mortgages on record, LPS said. But LPS also found that repeat foreclosures helped drive foreclosure starts higher in October, accounting for nearly half of foreclosure starts.