Foreclosure Processing Time Has Doubled Since 2007, Backlogging Housing Market

It takes much longer to process home foreclosures than it used to.

In May, according to the real estate data firm RealtyTrac, one in every 605 homes in America received a foreclosure filing. That's 214,927 foreclosures.

This is a 33 percent drop from the previous May, and it represents a 42-month low overall. But RealtyTrac senior vice president Rick Sharga says the number should be much higher.

“There's about 4 million seriously delinquent borrowers out there, many of whom would already be in foreclosure except for processing delays,” Sharga said in June.

It’s a point Sharga, and others, have made elsewhere. Nationwide, the average processing time has more than doubled to about 400 days since 2007, The Washington Post reports this week. In many states, it’s tripled.

There are a number of factors contributing to the foreclosure drag. Last fall, many banks paused the entire filing process while they tried to get on top of the robo-signing scandal.

The systemic nature of the robo-signing problem led homeowners and judges to begin looking at subsequent foreclosure cases much more carefully -- which added to the delays. Mediation programs, in use from Nevada to Pennsylvania, are making it easier for some people to keep their homes, but also contribute to the processing bottleneck.

On top of that, home purchases remain sluggish, and this spring there were relatively few first-time homebuyers -- a group that can usually be counted on to absorb inventory.

With fewer buyers on the market, banks may not have as much incentive to work through existing foreclosures, though according to Forbes, the banks themselves say that’s not the case.

For homeowners in foreclosure, the nationwide backlog isn’t necessarily a bad thing. The New York Times recently reported that evictions and repossessions have slowed down, giving many foreclosed homeowners a chance to save money and fight the cases against them.

Still, the more foreclosures pile up, the longer it will take for the housing market to hit bottom and begin recovering, say commentators like The Atlantic’s Daniel Indiviglio. And a drop in foreclosures now doesn’t preclude a spike down the road. In May, Douglas McIntyre at 24/7 Wall St. predicted that even though figures were at a several-year low, it’s likely “there will be a flood of foreclosures later this year or next.”

Comments

[tonycartman]

01:58 PM on 07/08/2011

This is such a bad thing. Bureaucracy is something that makes things even harder nowadays

Regards
Sarah
http://www.foreclosurelistings.com/

[Kenz300]

09:17 PM on 07/05/2011

If banks would process short sales in a timely manner they would not need to go to foreclosure.
I have heard of people waiting over 6 months or more to get an answer from the bank on an offer to buy. This is too long and helps no one including the bank.

[Kyle Ransom]

01:50 PM on 07/05/2011

The foreclosure process would be even more delayed if more homeowners challenged foreclosure on their homes. Only about 30% of homeowners contest foreclosure yet 90% of foreclosures are improper.

Kyle Ransom
http://gofightforeclosure.com/

[Nobody78]

10:03 AM on 07/04/2011

Yes, being able to afford to feed yourself and family tends to make people happier.

[blessedfrog]

08:04 PM on 07/03/2011

"On Sept, 1, 1894, we will not renew our loans under any consideration. On Sept. 1st we will demand our money. We will foreclose and become mortgagees in possession. We can take two-thirds of the farms west of the Mississippi, and thousands of them east of the Mississippi as well, at our own price... We may as well own three-fourths of the farms of the West and the money of the country. Then the farmers will become tenants as in England ..." -- 1891, American Bankers Association, as printed in the Congressional Record of April 29, 1913

From: http://users.cyberone.com.au/myers/money-masters.html

Do you think memos from the banking elite look much different today? I think not.

[Peter007]

07:48 AM on 07/04/2011

Banks don't to own property.
They are non performing assets.

[Peter007]

07:55 AM on 07/04/2011

Banks don't want to own properties.

[Nobody78]

10:04 AM on 07/04/2011

"They are non performing assets"

They are when they are bought cheap in a housing slump and then sold when the market go back up.

[dtallwalk]

11:16 PM on 07/02/2011

Good the longer it takes the better
sooner or later the banks will have to show a loss becuse of the con job did to good people

[Matthew Weidner]

09:01 AM on 07/02/2011

I am an attorney who defends homeowners in foreclosure. The larger world is still in denial about just how bad the problems are. THE EMPEROR HAS NO CLOTHES. There are not merely technical problems or minor issues like "robo signing", we have an entire legal and financial system in absolute chaos....it's anarchy. At some point in time, the "secret" will get out. The rest of the world will come to see what myself, and attorneys, judges and homeowners all across this country see every day....and then the real crisis will come. This is a very slow, slow, slow speed train wreck that is playing out in every community in this country. All this chatter and propaganda by the analysts and the WallStreeters is so fanciful...just like the glossy earnings reports of WorldComm and Enron...remember those? Except the proof of my warnings is found in millions of real property records filed in county courthouses all across this country....this country is drunk on delusions.

[tbryant80]

10:25 AM on 07/02/2011

Now that this issue is starting to hit the Commercial Real Estate market, it will get more play. Banks will now be dealing with better financed defendants (and plaintiffs). When these businesses get havoc wreaked upon them by these same banks, what will the government do? They say they are worried about over-regulation of small businesses, which is preventing job creation. What will be there excuse for not taking care of this mess when the small business itself is foreclosed upon? Both parties have insulated themselves from this problem, and it will come back to bite them both in the butt. We are swiftly heading for another recession. Once again, the banks are the cause, and once again, our government remains silent.

[tbryant80]

10:27 AM on 07/02/2011

The CRE market, combined with the already clogged Residential foreclosures, will make these delays much longer. This problem is not going away. It will only grow, and continue to steamroll through the economy.

[truthfinderddw]

05:54 AM on 07/02/2011

It won't be over for a long time when you consider all these State's cutting Budgets, Local Governments are increasing Property Taxes for the purpose of running Public Services, Schools and the like. Mortgage payments will continue to rise despite falling values and more and more Americans will find it necessary to give up their Homes. I predict the word Home Equity will be lost for years!

[Realtors Are Liars]

08:58 AM on 07/02/2011

And people will finally realize that housing depreciates and never goes up in price, ALWAYS.

[Tara Hunkoff]

09:32 AM on 07/02/2011

Housing can appreciate: I made money on an all-cash SFR deal in less than two years, although I concede it was just $5300, and it took both the seller's agreement to pay half the closing costs and my homesteader's tax exemption to make even that much.

However, I realize that practically all resident owners execute mortgages. The interest involved makes it impossible to make a profit. No one should ever buy a personal residence in the hope that it will make a profit. Shelter is almost always a cost, period.

[tbryant80]

10:29 AM on 07/02/2011

I absolutely agree. You may see states topple because the government has aided in protecting the buddies in Wall Street...."What's in your wallet?"

[nopilikia]

01:04 AM on 07/02/2011

That's what happens Wall Street banksters when you bundle mortgages.....give it a phoney "AAA".... then slice and dice it.......and sell it all over the world as a "investment grade" product.

[Peanut Santiago]

02:02 AM on 07/02/2011

The banks used to keep and service their own mortgages.

This is what happens when the banks have no skin in the game and the bankers get greedy and selfish and take ridiculous risks.

[nopilikia]

02:21 AM on 07/02/2011

That and the fact... in the Gramm-Leach-Bliley Act of 1999.....Wall Street banks...and only Wall Street banks...got an exemption from states "Bucket Shop Laws of 1909"... the unregulated gambling with OPM (Other Peoples Money).....and guess what? That exemption is still on the books and Wall Street banksters are still doing it to this day.

[tbryant80]

10:32 AM on 07/02/2011

You left out the fact that the SEC did not oversee these transactions, even when there were blatant clauses in the PSAs REQUIRING fraud to be performed.

Just like with Bernie Madoff, they were asleep at the wheel. We are a lawless nation when it comes to the financial industry.

[Tara Hunkoff]

12:50 AM on 07/02/2011

"Overpriced", "underpriced"- please ...

A thing - anything - is worth exactly what someone will pay you for it.

In the aggregate market trends are evident, of course, but one should never forget that each sale stands on its own. In any market, the smart parties exploit anomalies caused by ignorance or emotion.

[libertymen]

05:49 AM on 07/02/2011

Thats right.
Buy low,sell high.
It must be the herd instinct to buy during booms.
Most of those houses are overpriced trash anyway.

[Realtors Are Liars]

08:13 AM on 07/02/2011

All housing prices are currently inflated by as much as 85%. Why do you think sales are at 14 year lows and falling? Drop the price, increase the sales.

[giwel7]

11:59 PM on 07/01/2011

interesting the foreclosures slowed down after fraud was found in the foreclosure process. makes one wonder ...not able to commit fraud- no foreclosure?

[mrhandyman3105]

11:53 PM on 07/01/2011

This is one of the main reasons why the housing reports are "unreliable" and misleading. The statistical reports are excluding a lot of relevant raw data. They also do not take into account all the homes being kept off the market by the banks to keep their books inflated and the median price of a home high. And as a related side issue or impact, why the economic reports indicating that we are in a "recession" instead of a depression is equally unreliable.

The sky "IS" falling, yet the bankers, and real estate industry, along with the government is saying everything is fine.

[tbryant80]

10:34 AM on 07/02/2011

Especially when Lender Processing Services is one of the reporting companies. Can you rely on the reports of the largest problem in the robosigning scandal? Maybe Linda Green is doing those reports as well.

[chance1946]

07:28 PM on 07/01/2011

This mortgage crisis should have been no secrete. The government should have knew this was coming over 10 years ago and did nothing. We still have a lot of foreclosures to go.

[MSROADKILL612]

10:15 PM on 07/01/2011

U misspelled secret, but aptly

[giwel7]

12:00 AM on 07/02/2011

it seems the government did know and still knows

[RedRat]

07:16 PM on 07/01/2011

Well much of this is the problem of the lenders and their sloppy ways of making loans to begin with. They thought they were saving money, like many businesses, shortcuts. Now the chickens have come home to roost on them. These foreclosures are going to cost them money. Adding to this whole mess is the repackaging of the loans where clear title has been muddied. You cannot foreclose until your title is clear. Again, far too many shortcuts during the boom years.

[tbryant80]

10:39 AM on 07/02/2011

And the Trustees did not do their due diligence on the investors behalf.

[RedRat]

12:44 PM on 07/02/2011

You might also throw in there the already existing regulatory agencies who looked the other way because of political pressure from both Congress (Schumer, Dodd, Frank) and the Administration (Bush & Co.). In this, BOTH parties must share the blame.

[Herm]

07:11 PM on 07/01/2011

The banksters and the politicians still relatively busy mopping up - the floor with what few middle class people this country has left.

Ho-hum. Move on, people, nothing to see here.