As Foreclosure Activity Drops To 40 Month Low, Delinquent New Yorkers Have Lived Mortgage-Free For Nearly 3 Years

Tyler Durden's picture

Today's foreclosure update from RealtyTrac is chock full of interesting data, although none of it is surprising. Those who have been following the complete debacle that is the fraudclosure crisis know that over the past 6 months the foreclosure activity has plunged. Indeed in April, total foreclosures, split between default notices, foreclosure auctions, and bank repossessions affected 219,258 properties: a 9% decline from April, a 34% plunge from a year earlier, and the lowest in 40 months! And while REO events (or disposals once a bank has the keys to the property in its possession) took an average of 400 days, up from 340 days a year earlier, and compared to 169 in Q1 2007, it is the length of the foreclosure process that explains not only the persistent surge in retail stocks, but why US GDP is artificially inflated by at least 0.5-1.0% (and likely has a major impact on inflation): from the release: "The average timeframe from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states." In other words, once a deadbeat stops paying their mortgage in NY or NJ, it takes nearly 3 years to get them to vacate. It also means that those who stopped paying their mortgages around time Lehman filed are still living mortgage free in the Empire and Garden States!  And there are those who wonder why the "squatters rent" amounts to at least $50 billion...

Full monthly breakdown of foreclosure activity:

And from the release:

“Foreclosure activity decreased on an annual basis for the seventh straight month in April, bringing foreclosure activity to a 40-month low,” said James J. Saccacio, chief executive officer of RealtyTrac. “This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure.

“The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives,” Saccacio continued. “Data from the Mortgage Bankers Association shows that about 3.7 million properties are in this seriously delinquent stage. The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process.”

On why banks no longer care to evict anyone, no matter how long they are living rent free:

Foreclosure timelines lengthening

Nationwide, foreclosures completed (REOs) in the first quarter of 2011 took an average of 400 days from the initial default notice to the REO, up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.

The foreclosure process took much longer in some states. The average timeframe from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states.

The average foreclosure process in Florida took 619 days for foreclosures completed in the first quarter, up from 470 days in the first quarter of 2010 and nearly four times the average of 169 days it took in the first quarter of 2007.

The average foreclosure process in California took 330 days for foreclosures completed in the first quarter, up from 262 days in the first quarter of 2010 and more than double the average of 134 days in took in the first quarter of 2007.

And why evicit: after all, all that does is to accelerate a mark to market event on a bank's books. And with banks making money (inversely) fair and square by merely gaming POMO and other monetization events, and trading with 100% perfection each quarter, who cares that there is no incoming cash flow from trillions of loans.