The percentage of homes in the foreclosure process continued to climb in September, even as delinquencies and foreclosure starts declined, according to the latest report from data aggregator Lender Processing Services Inc.
While fewer homes are entering the foreclosure pipeline, there's been an even more drastic slowdown in homes coming out the other end, due in large part to the "robo-signing" controversy, which has slowed the pace at which lenders can repossess homes and put them back on the market.
LPS said foreclosure starts were down 20 percent in September from a year ago, to 220,273, slightly below the three-year average. But foreclosure starts continue to outnumber foreclosure sales by a factor of more than three to one, reflecting the fact many homes are tied up in the system for months or years after lenders initiate foreclosure proceedings.
Foreclosure inventories continue to grow in judicial foreclosure states where courts handle foreclosure proceedings, with lenders taking an average 761 days to complete the foreclosure process on delinquent homeowners in those states -- six months longer than in nonjudicial states.
Nationwide, nearly 40 percent of homeowners in foreclosure had not made a payment in two years, and 72 percent had not made a payment in a year or more, LPS said.
LPS estimated there were 2.17 million homes in some stage of the foreclosure process at the end of September. That's 4.18 percent of all homes with mortgages and an 8.9 percent increase in the foreclosure rate, which stood at 3.84 percent at the same time a year ago.
Another 4.2 million homeowners were at least one payment behind on their mortgages. That's 8.09 percent of all homes with mortgages, down 12.7 percent from the 9.27 percent delinquency rate a year ago.
A bright spot in the report was that the number of seriously delinquent loans -- mortgages in arrears by 90 days or more but not yet in foreclosure -- continues to decline. While 1.84 million homeowners were seriously delinquent, that's down 39 percent from January 2010, when 3.06 million mortgages were on the verge of foreclosure.
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