Analysts expect between 900,000 and 1 million homes will move from delinquency into REO in 2012, back to levels seen before the robo-signing slowdown.

Servicers moved roughly 800,000 properties through the foreclosure process and into REO liquidation in 2011, according to RealtyTrac. After resolving affidavit problems late last year, banks began moving more properties through the process. JPMorgan Chase (JPM) analysts expect repossessions to reach as high as 900,000 even with a wave of new alternatives to foreclosure.

"Several major policy changes in the last few months have sped up resolution of the pipeline. Of course, new delinquencies will ensure that full resolution will still take years, but the pace may be faster than we expected," analysts said.

Daren Blomquist, vice president of RealtyTrac, said that pace could return this year.

"For 2011 we hit 804,423, not quite the 825,000 we were on pace for because of a slowdown in November and December," Blomquist said in an interview. "We are expecting close to 1 million REOs in 2012 as some of the delayed foreclosures finally complete the process this year."

The pace began to pick up in January but is still down from 2011. Servicers repossessed 66,500 homes that month, up 8% from December but down 15% from one year ago.

Just because a property moves into REO doesn't mean it will be resold that year, either. For instance, Freddie Mac data shows the GSE had to wait an average of nearly 200 days to unload an REO. According to Blomquist, there were nearly 538,000 REO sales in 2011, roughly two-thirds of all homes repossessed that year.

About 2.6 million loans, or half of the total delinquency inventory, will be removed either through modification, short sale or a traditional repossession in 2012, Chase analysts said.

The AG settlement guidelines released Monday could result in 500,000 modifications, according to Chase.

The Treasury Department expanded the Home Affordable Modification Program in January to allow more borrowers to qualify and provide higher incentives for principal reduction. Analysts still expect the changes to result in relatively few additional modifications, roughly 140,000 added to the 220,000 permanent workouts under the program estimated this year.

If so, HAMP workouts may outnumber the 270,000 proprietary modifications, which have routinely outsized HAMP in the past.

Chase analysts also expect the Fannie Mae and Freddie Mac bulk REO sales and rental programs to reach as high as 100,000 properties. A pilot program began in February to sell just 2,500 Fannie-owned homes.

Roughly 500,000 short sales could occur in 2012, roughly one-third of all liquidations — which include the 900,000 expected repossessions and the new rental program as well.