Average Months in Distress Extended in Judicial, Non-Judicial States
According to CoreLogic's March MarketPulse report, the time properties stay in distress before going to sale has increased nearly five fold since 2003 in non-judicial states. The data tracked months in distress from 2003 to 2012 and found that the disposition timeline in both judicial and non-judicial states has seen a significant extension.
CoreLogic's disposition timeline begins when a loan is 90 days delinquent and ends with an REO sale. In judicial states, the disposition timelines remained relatively constant at seven months but began to rise in mid-2008 before increasing to an average of 35 months. It takes about 24 months before a distressed property goes to sale in non-judicial states.
CoreLogic's data shows that it takes 46 percent longer to dispose of a distressed property in a judicial state compared to a non-judicial state but non-judicial states have seen their timelines surge.
CoreLogic stated, "[I]t also takes almost five times longer to process a full disposition in non-judicial states today than in 2003 when serious delinquencies were rare, foreclosure could happen quickly and an REO sale was expedient."
The report attributes the increased timeline to several reasons including "operational capacity constraints at the servicers and in the court systems" as well as the availability of more complex disposition processes, legal challenges, and changing regulations.
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