The bifurcated housing recovery continues with judicial states still struggling with a backlog of foreclosures caused by longer default timelines and overall delays in moving properties, mortgage data firm Lender Processing Services said.

The foreclosure inventory in judicial states takes three times as long to clear when compared to non-judicial states, LPS said. However, foreclosure starts and sales rates are down across the nation due to the impact of compliance issues and regional regulations that slow the process.

“On average, pipeline ratios – the rate at which states are currently working through their existing backlog of loans either in foreclosure or serious delinquency – are almost twice as high in judicial states than non-judicial states,” said Herb Blecher, senior vice president of LPS Applied Analytics. “At today’s rate of foreclosure sales, it will take 62 months to clear the inventory in judicial states as compared to 32 months in non-judicial states.”

Some non-judicial states, like Nevada, have become de facto judicial foreclosure states since some foreclosure legislation has extended the overall timeline. The time it takes to clear a property in Nevada increased from 27 months in January 2012 to 57 months in the first month of 2013.

New problem loan rates in non-judicial states declined slightly over the last six months, while judicial foreclosure states saw an increase of almost 20%.


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