Foreclosures to 'cast a long shadow' in judicial states

The number of homes in some stage of foreclosure continues to trend downwards, though continued delays in foreclosure timelines in judicial states are likely to slow the pace of improvement in the future, according to CoreLogic.

The foreclosure inventory decreased by 33 percent in September to 902,000 homes from 1.4 million a year before, CoreLogic reported in its latest National Foreclosure Report. Month over month, the foreclosure inventory decreased by 3.3 percent.

The number of completed foreclosures in September decreased on an annual basis by an even larger margin than the foreclosure inventory. 51,000 foreclosures reached conclusion in September, down 39 percent year over year and 0.7 percent from month over month.

Despite the steep decrease in inventory, backlogs of foreclosures in judicial states — states where judges must sign off on foreclosures — are still bloated and may slow improvement in the future.

“The foreclosure inventory continues to decline, now standing at an early 2009 level,” said Mark Fleming, chief economist for CoreLogic. “Just over 900,000 properties remain in the inventory, two thirds of them in judicial states where the foreclosure process is typically slower.”

“Consequently, the pace of overall improvement in the inventory will slow down and distressed assets will cast a long shadow over housing markets in states with judicial foreclosure,” he added.