According to (LPS) Lender Processing Services, foreclosure inventory in November 2012 dwindles as mandates from the national mortgage settlement slowed down the pace of foreclosure filings.
Foreclosure inventory decrease to 3.51 percent in November 2012, an almost 10 percent drop from September. In February, state and federal official agreed on a settlement with five of the nation’s largest servicers—Ally, Bank of America, Citi, JPMorgan Chase, and Wells Fargo—over allegations of abusive foreclosure practices.
This settlement mandates servicers to give a 14 day notice before referring homeowners to foreclosure, and these notices were sent starting in September.
Foreclosure filing totaled 130,053 in November 2012, a 4.6 percent month-over month increase and a 27.6 percent yearly decrease.
As servicers get up to speed on settlement mandates, LPS stated it “expects foreclosure starts to rebound as mortgage servicers incorporate the new procedural requirements into their operations in the coming months.”
LPS also reported delinquencies have risen about 15 percent in areas impacted by Hurricane Sandy. Since August 2012, the delinquency rate in New Jersey has increased by 15.2 percent to 8.41 percent, while Connecticut and New York have reported increases of 15.4 percent and 14.8 percent, respectively, during the same time period. Overall, the national delinquency rate stood at 7.12 percent in November and increased just 3.7 percent since August 2012.
As the number of foreclosures ramps up, the number of short sales should also increase due to the fact that short sale is best alternative to foreclosure for people who don’t qualify for loan modification. Short sale is being predicted to be sought by homeowners to avoid foreclosure for many reasons. These reasons include no deficiency judgments from the lender, no foreclosure on credit history, less time required to purchase the next house, able to meet security clearance requirements for employment purposed, etc.
Judicial states continue to have a larger portion of delinquent loans. Out of the top 10 states with the highest rate of non-current loans, seven required a judicial process.
The seven states were Florida, New Jersey, New York, Illinois, Maryland, Louisiana, and Connecticut.