The inventory of mortgage foreclosures in the United States is on the decline overall, but for what inventory remains, judicial states account for almost three-quarters of the country’s foreclosure market, according to Black Knight Financial Services.
Black Knight Monday released its latest Mortgage Monitor Report, and as of the end of June found that despite that judicial states account for 42 percent of all active mortgages in the U.S., these same states house more than 70 percent of the country’s past-due loans. New York and Hawaii have the highest number of average days past due for loans in foreclosure ‒‒ each above 1,300 days. New Jersey and Florida come a close second, with more than 1,200 days each. States such as these, reported Black Knight, have 3.5 times the foreclosure inventory of non-judicial states, such as Minnesota, Colorado and the Dakotas.
“Nationally, the foreclosure inventory rate has declined for 26 straight months, and is currently at its lowest point since April 2008,” said Kostya Gradushy, Black Knight’s manager of research and analytics. “But this can obscure the stark difference that remains between judicial and non-judicial states.”
According to Gradushy, the share of loans in foreclosure in judicial states is 3.23 percent, which though a significant drop from its January 2012 high of 6.6 percent, is still more than four times higher than the pre-crisis norm. Further, more than 60 percent of the foreclosure inventory in judicial states has been past due for two years or more. “In fact, these loans have been delinquent an average of 1,084 days, as compared to just 775 days in non-judicial states,” he said.
Black Knight also looked at loan modifications and found that overall activity is down to about 45,000 mods a month so far this year. However, the share of modifications through the Home Affordable Modification Program has increased over the last five months. HAMP has accounted for half the modifications this year and for more than 60 percent in May alone, the report showed.
The HAMP modifications, however, are doing better than those done outside the scope of HAMP. According to Gradushy, non-HAMP modifications were almost twice as likely to re-default in six months.
Black Knight also found that home sales volume is rebounding as expected with the spring and summer, and that short sales have dropped from making up 60 percent of distressed sales (at the end of 2012, the peak) to just below 34 percent at the end of June. REO properties remain stable at around 25 percent.