Foreclosure inventory remains near all-time high

The nation’s foreclosure inventory remains near an all-time high, with 4.12 percent of all active mortgages in the foreclosure pipeline in addition to the 3.2 percent that are 90 days or more delinquent but have not yet begun the foreclosure process.

The data, reported in the May Mortgage Monitor released by Lender Processing Services, shows that the situation is more nuanced when looking at the breakdown between states that apply judicial versus non-judicial foreclosure processes.

Nationwide, foreclosure sales – which mark the end of the foreclosure process – were up 10 percent in May with the increase more pronounced in non-judicial states. In those states, 6.46 percent of the existing foreclosure inventory progressed to foreclosure sale in May, as compared to just 2.14 percent of the inventory in judicial states.

The difference between judicial and non-judicial states impacts the length of time loans remain in the foreclosure pipeline as well. The percent of aged foreclosure inventory has increased notably in judicial states.

Approximately 53 percent of loans in foreclosure in states that follow a judicial foreclosure process have been delinquent for more than two years, as compared to just over 30 percent of loans in non-judicial states.

A judicial foreclosure requires the property to be processed through the state’s courts. This differs from non-judicial foreclosures, which are processed without court intervention. Washington is a non-judicial foreclosure state.