The backlog that keeps the average property in the state New York in foreclosure proceedings for more than four years isn’t going away anytime soon. In fact, the foreclosure logjam isn’t expected to dissipate until at least 2016, according to a new report from Moody’s Investors Service on foreclosures for loans in private-label residential mortgage-backed securitizations.
Due to New York’s judicial foreclosure process, a private-label RMBS loan in New York currently spends an average of 1,498 days in foreclosure proceedings before exiting. That’s up from 1,339 days as of 2013’s fourth quarter.
The number has continually grown since the fourth quarter of 2006, when properties were in foreclosure proceedings for an average of 271 days.
And while the number of loans in foreclosure fell from 40,693 to 38,213 in the second quarter of 2014, the figure is still above the foreclosure total at the end of 2009, when 36,844 properties were in foreclosure.
Just behind New York in ranking of states with the highest exposure to 60-plus days delinquent loans is New Jersey.
“New York and New Jersey together account for more than 20% of all loans in private-label RMBS that are more than 60 days delinquent, and the foreclosure timelines in the two states (which currently are five times as long as they were before the financial crisis) are the longest in the U.S. after Florida,” Moody’s said.
“The prognosis for New Jersey is better than for New York, however, because New Jersey’s lengthy foreclosure timelines are mainly the result of legacy issues.”
A private-label RMBS loan in New Jersey currently spends an average of 1,322 days in foreclosure proceedings before exiting, up from 1,080 days in 4Q13.
In New Jersey, the liquidation timeline for an REO property has dropped to 69 days from a peak of 175 days in September 2011. In New York, even though liquidation timelines extended in the second quarter of 2014, they have still narrowed to 114 days from 173 days at their peak.