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California has been the poster child for the subprime mortgage mess since the bubble burst in 2008. However, a November report from analytics firm 1010data, conducted in conjunction with CoreLogic, show New York has bumped California out of the top five worst housing markets in the country. According to the November report, delinquencies in both the subprime and Alt-A mortgage sectors are higher in New York than they are in California. Approximately 44% of subprime and Alt-A mortgages in New York are 60-days or more delinquent. In California, approximately 38% of subprime mortgage loans and Alt-A mortgage loans are 60-days or more delinquent. (Click to expand) Jonah Green, director of mortgage analytics at 1010data, attributed the firm's findings to how New York handles foreclosures. New York is one of 23 judicial states, which deals with foreclosures through the legal system and gives borrowers a trial before being foreclosed on. California is a nonjudicial state, meaning a foreclosure doesn't need to be approved by a state court. Green said the time it takes for a servicer or lender to repossess and liquidate a home in New York is much longer than California because of the judiciary process. "Securitized Alt-A and subprime loans that are being liquidated in New York haven't made a payment in 32 months," Green told HousingWire. "In California, however, it is only 19 months." In 2009, the liquidation rate in California was 15 months, compared to 21 months in New York. Green said the judiciary process of dealing with foreclosures slows a state's recovery rate. Ultimately, he believes this trend will spread to other judicial states and the shadow inventory will continue to grow, slowing a recovery. Green said delinquencies in New York are higher despite the unemployment rate being significantly lower than in California. The current rate of unemployment in New York is 8.3% and in California, it's more than 12%. Based on these figures, he said, there should be more demand for housing in New York, and the market should have hit bottom because prices haven't gone down that much. The only reason it hasn't is because homes cannot be liquidated because borrowers are awaiting trial. "California is more likely to recover before New York in any meaningful way because the first step is to get that supply down," Green said. "If you don't get that supply down, it prolongs recovery." Write to Christine Ricciardi.

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