CHICAGO — Backlogs in foreclosure processing are causing delays in home-price improvement and could wind up affecting the cost of a mortgage.
The situation appears worst in New York, where it takes an average of nearly three years — 1,072 days, to be exact — for a home to go through the foreclosure process. It’s not much better in New Jersey, where it took an average of 931 days to foreclose on a home in the third quarter, according to statistics from RealtyTrac. Or in Florida, where it took about 858 days.
Nationwide, the average time for homes to spend in the foreclosure process, meanwhile, was just 382 days. That may seem better, but it’s actually still an extended stretch compared with the average of 336 days in the third quarter of last year — and only 140 days in the third quarter of 2007.
At the current rate of processing, no wonder the volume of foreclosures in progress is still high, even as the economy is improving and fewer mortgages are becoming delinquent. And some experts think it’ll be 2015 before foreclosure inventories begin to approach normal levels.
That could pose a problem. “As unpleasant as it is for everyone involved, when a borrower can’t — or decides not to — make payments, the more quickly you can move (the house) back into the inventory and get a new homeowner in it, the better it is for the community,” said Rick Sharga, executive vice president at Carrington Mortgage Holdings.
Processing times are generally longest in states with judicial foreclosure processes, where the courts are involved in finalizing the foreclosure.
In New York, the courts are extremely backlogged, said Allison Schoenthal, a litigator with Hogan Lovells who represents banks and other financial institutions in contested litigation relating to foreclosures. The state requires settlement conferences for all foreclosure cases, and that adds more court appearances to the already bogged-down system, she says.