Time needed to sell all Md.'s foreclosures: 21 years
At the rate homes are going on the foreclosure block in Maryland these days, it would take 21 years -- yes, years -- before the current "pipeline" of homes in danger of foreclosure are all sold.
That's according to industry consultant LPS Applied Analytics, which shows a dramatic drop in the number of Maryland foreclosure sales (repossessions or other involuntary transfers) after the robo-signing revelations last fall. That's pushed the state's time-to-sell figure skyward to the fourth-highest nationwide.
This seems poised to change, with warnings of impending Maryland foreclosure cases spiking in November. But here's how things stood as of September:
LPS Applied Analytics says the owners of about 105,000 Maryland homes were at least 90 days behind on their payments, including those with foreclosure cases filed against them. That number hadn't grown much over the year. But foreclosure sales dropped 80 percent -- from an average of about 2,000 a month statewide to about 400.
Why? Foreclosures went from flood to trickle after news that mortgage-servicer employees were signing foreclosure documents for courts assembly-line-style, without having any idea if the information was accurate -- and that some foreclosure attorneys were outsourcing the signing of their names to other people, among other alleged problems. States where foreclosure is a court case, not a non-judicial affair, have seen their collective time-to-sell pipeline double since then.
But Maryland's rose fivefold, from about four years in 2010. Perhaps some state-specific reactions to robo-signing made mortgage servicers more cautious about filing cases:
Maryland's highest court, appalled that local attorneys were counted among the "sign all this for me" group, passed emergency rules last fall designed to allow for large-scale document checks and to send the message that judges should feel free to haul offenders in to explain themselves.
Baltimore-based Civil Justice, meanwhile, filed motions to get foreclosure suits thrown out, arguing that the only way to keep title from being fatally flawed and hurting buyers downstream was to start the cases again and do it right this time. GMAC Mortgage decided to drop 250 cases in Maryland and said it was not taking similar actions elsewhere.
But several other states have a higher pipeline of potential future bank-owned homes. No. 1: New York, where judges have put the mortgage industry and their lawyers in the hot seat and the state attorney general is investigating mortgage securitization.
Here are the states with the 10 largest pipelines measured in years needed to sell, according to LPS Applied Analytics:
| Average monthly FC sales | Pipeline (90+ and FC) | Years needed to sell off that pipeline | |
|---|---|---|---|
| N.Y. | 317 | 217,350 | 57 |
| D.C. | 11 | 7,453 | 57 |
| N.J. | 289 | 180,453 | 52 |
| Md. | 417 | 104,960 | 21 |
| Conn. | 205 | 48,791 | 20 |
| Vt. | 19 | 4,236 | 18 |
| Maine | 72 | 13,496 | 16 |
| Ill. | 1,785 | 222,581 | 10 |
| Hawaii | 129 | 15,235 | 10 |
| N.D. | 13 | 1,378 | 9 |
The firm's parent, Lender Processing Services, has been accused of robo-signing too as its employees handled documentation for mortgage servicers. A Nevada grand jury just indicted two people who worked for Lender Processing Services during the housing bubble in connection with an allegedly "massive" robo-signing scheme.
Nevada, by the way, is non-judicial, and its time-to-sell has actually been lower this year than it was in 2010 -- just under two years rather than just over two. That's one of the lowest figures in the country, behind only Arizona and Wyoming (both under a year and a half).
Ronald Deutsch of Cohn, Goldberg and Deutsch, a Towson law firm that handles foreclosure cases for the mortgage industry, said servicers have ratcheted back dramatically for the past year to year and a half in Maryland and a variety of other East Coast states as they work to retool their systems.
"There is a tremendous backlog now of files that need to move through the system, unfortunately," he said. "There are a lot of people who have not made payments on houses in this state for two years, three years. It's reached the point of, I don’t know if criticalness is overblown, but it's reached a crescendo at this point for sure. At least one and maybe more servicers are starting now to get it flowing again."
That means the effect of foreclosures on the housing market in 2012 could be far different than what we had in 2011.
Categories: The foreclosure mess
Sign up for the At Home newsletter 
Comments
I doubt anyone is surprised by this. In fact, many have been saying on here that this will go on for a long time as long as they delay the inevitable.
Posted by: Frank Rizzo | November 21, 2011 7:46 PM
Having the foreclosure in effect should HELP many properties to sell when compared to the tenuous, cumbersome and uncertain process of dealing with short sales.
What that price will finally be remains the only question. But here's a hint: expect to see downward arrows on the graphs until the pre-boom price point is (re)achieved at least. Specific condition issues at those properties from the interim lack of care will probably keep prices at that low level for a while after.
Posted by: MrRational | November 22, 2011 8:32 AM
Just to point out that Maryland is a full recourse state. By carelessly clouding the title, the lender's have lowered the amount that the property can get in a foreclosure auction, but not the amount that they can try to get from the former homeowners after foreclosure.
Posted by: JIm A | November 23, 2011 10:01 AM
WOW.
Posted by: smithbaltimore | November 26, 2011 12:41 AM
Im generaly not an optimist these days,as far as the economy and housing are concerned.But i do think its worth pointing out that almost all experts predicted that it would take Europe at least 50 years to rebuild after WW2. Less then 15 years later, there was very little rubble left.
So one should be careful with these types of predictions
Posted by: Pete from Highlandtown | November 28, 2011 3:49 AM
Pete, I see this as not so much a prediction as a snapshot in time. It already looks like things are changing, with more warnings of impending foreclosures going to homeowners this month, but we'll see.
I sure hope that the housing market will have gotten to some kind of (good) stability in less than 21 years, for everyone's sake.
Posted by: Jamie Smith Hopkins | November 28, 2011 6:18 AM
These figures need to be checked, because they don't jive with most reports by reputable sources - NAR for example states that the numbers are far less. Independant companies have backed up these figures as well. It's closer to 21 months nation wide WITH shaddow inventory of banks.
Posted by: chad anderson | December 5, 2011 10:12 AM
chad, there's a difference in measurement here.
Most shadow inventory statistics are crunched looking at the number of serious delinquencies and how long it would take to sell them on the open market at the current pace that all types of homes are selling. LPS is looking at the pace of involuntary transfers -- repossessions, mostly. It's only after that point that homes hit the market as bank-owned properties, assuming no paperwork snafus. So the sharp slowdown in foreclosures because of robo-signing makes a big difference for this measurement.
In Baltimore alone, the number of new foreclosure cases between January and September was down more than 60 percent from the same period last year, according to the Baltimore Neighborhood Indicators Alliance.
Let me know if you're aware of specific problems with these figures (or any other ones).
Posted by: Jamie Smith Hopkins | December 5, 2011 11:00 AM