The number of new foreclosures in 2011 dropped nearly 40 per cent, according to year-end numbers just released by Lender Processing Services; there is, however, little cause for celebration.
The fall is largely due to moratoria and process reviews stemming from the so-called “robo-signing” foreclosure paperwork scandal.
Mortgage delinquency rates were largely unchanged from last year, which means all that distress will be pushed forward to 2012 and beyond.
To give you an idea of just how much the “robo” scandal is toying with the numbers, LPS compared states that require foreclosures to go through the courts versus states that don’t (judicial versus non-judicial) and found the following:
– 50 per cent of loans in foreclosure in judicial states have not made a payment in two years, as opposed to 28 per cent in non-judicial states.
– Foreclosure sale rates in non-judicial states are about four times those in judicial states.
“Nationally, foreclosure pipelines remain at historic highs, but they are clearing at very different rates depending upon state procedures,” says Herb Blecher of LPS Applied Analytics.
With the nation essentially split between judicial and non-judicial foreclosure states, it’s safe to say the foreclosure crisis will linger longer than anyone expected, especially with negotiations for a settlement between big banks and state attorneys general hitting yet another roadblock.
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Bankrate.com California Attorney General Kamala Harris rejected the latest proposal this week, calling it inadequate.
“Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability. At this point, this deal does not suffice for California,” she wrote in a statement.
Bank sources say that without California the value of the settlement would drop by billions and banks would still have major liability for foreclosure fraud. About one fifth of the nation’s foreclosures are in California.