Though the number of new foreclosures entering the pipeline continues to slow, the pace of cases proceeding to auction has picked up in 19 states, including Oregon, Massachusetts, Utah, Connecticut, Delaware and New York. Many of those cases have been grinding through a legal morass for years. The average foreclosure takes 1,037 days in New York, 929 days in Florida and 828 days in Illinois.
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In many of the longest-running foreclosures, the paper trail was scrambled amid the housing frenzy and original documents weren't properly executed. Other cases remain gridlocked by multiple mortgages, unpaid tax bills or an unclear chain of ownership. Tangled in legal limbo for years, they are among the thorniest to resolve.
"The easier ones tend to get done sooner," said Mark Fleming, chief economist at CoreLogic. "It gets harder and harder to fix the remaining foreclosures."
During the peak of the crisis, with buyers on the sidelines and prices falling, lenders' inventories of unsold homes swelled. That meant many of them had little to gain by speeding up the foreclosure process and adding to a glut of empty houses that had to be maintained.
"In some cities, there are fines against the lender if the foreclosed property is not taken care of ... that can add up very quickly," Blomquist said. "If the lender can't take on that property and maintain it property, it may benefit them to allow the homeowner to live there and not foreclose until they're ready to [take possession]."
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But as prices have recovered, the backlog of bank-owned homes—which peaked at more than 1 million in September 2010—has been more than cut in half. Many lenders are increasingly confident about moving seized houses into the marketplace, Blomquist said.
Lenders trying to manage the flow of new seizures can't predict how long conditions will remain favorable. Housing prices have rebounded in most markets, but not to their pre-2007 peaks.The strength of pricing improvement and of demand is unclear. And record low mortgage rates, which helped revive the moribund market last year, appear to have bottomed.
In many markets, supplies of homes for sale were tight because many underwater homeowners couldn't list their properties if it meant selling for less than the value of their mortgage. More of them are coming to market now, competing with lender inventories.
Some foreclosed homes may never sell. Some of the longest cases involve properties that have been all but abandoned and may never find another owner.
"There are lien issues, or mold or asbestos, or all kinds of things that make it a challenge to sell it—that may be part of the reason they ended up in foreclosure in the first place," said Fleming at CoreLogic. "These are often the homes that end up given back to the municipality and bulldozed."
More of the remaining foreclosures are in judicial states, where a judge must review all foreclosures. After widespread reports two years ago of sloppy paperwork and document fraud, many of those judges began giving the process closer scrutiny.