Higher Foreclosure Rates Bump up Percentage of Serious ...

05/14/2012 By: Esther Cho, DSNews.com

According to a report from Foreclosure-Response.org, the serious delinquency rate, which includes loans 90 or more days past due plus foreclosures, increased for the first time after a downward trend between December 2009 and June 2011.

Serious delinquencies rose from 9.2 percent in June 2011 to 9.7 percent in December 2011 for the nation?s 100 largest metropolitan areas. While the 90-plus delinquencies component of the percentage was flat at 3.8 percent and has remained largely unchanged for the past four quarters, foreclosure rates continue to rise, and now stand at 5.9 percent. In June 2011, the foreclosure rate was 5.5 percent.

According to the report, the data suggests the build-up of foreclosed homes in judicial states is the main reason behind the rising foreclosure rate.

Metros located in judicial states had foreclosure rates averaging 7.2 percent in December 2011 compared to metros in non-judicial states where foreclosure rates averaged 4.7 percent.

Also, when separating metro trends in judicial states from non-judicial, the foreclosure rate in judicial areas has actually increased since March 2009, which is when Foreclosure-Response.org began tracking the data, while the rate has been roughly flat in non-judicial metros for the last five quarters.

Nearly half, or 46, of the 100 largest U.S. metro areas are located in judicial states.

Maya Brennan, senior research associate for Center for Housing Policy and a member of the Foreclosure-Response.org team, explained it is not the judicial foreclosure process itself that causes the high rates, but the lack of resources to resolve the backlog of foreclosures.

?We don?t mean to suggest that states with a judicial foreclosure process should end that practice,? said Brennan. ?Review by the courts offers safeguards for borrowers and opens alternative ways to resolve foreclosure, like mediation. Devoting more judicial resources to processing the high volume of foreclosures would help ensure due process without burdening homeowners, lenders, and neighborhoods with unreasonably long foreclosure timelines.?

Judicial state Florida averages 800 days before its properties leave the foreclosure process.

The report explained the long timeline is likely due to inadequate judicial resources, which Florida has addressed this year by re-hiring retired judges to help manage the case load of foreclosures.

The top five metro areas with the highest foreclosure rates were all located in Florida, starting with Miami (18.9 percent), Port St. Lucie (16.7percent), Palm Coast (16.6 percent), Tampa (15.9 percent), and Orlando (15.6 percent).

Metro areas with the highest seriously delinquent rate overall (90-plus delinquencies and foreclosures) were Miami (23.6 percent); Vineland, New Jersey (23.4 percent); Port St. Lucie (21 percent); Orlando (20.6 percent); and Palm Coast (20.5 percent).

When looking at the top five metro areas that saw the largest increases in their seriously delinquent rate over a one year period since December 2011, only New Jersey and Illinois metros made the list, with Vineland taking the number one spot again with a 4.48 percent increase. Atlantic City, New Jersey (+3.23 percent) was second, followed by Trenton, New Jersey (+2.50 percent); Rockford, Illinois (+2.30 percent); and Danville, Illinois (+2.20 percent).

The Foreclosure-Response.org data is released quarterly by the Center for Housing Policy, Urban Institute, and Local Initiatives Support Corporation (LISC).
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