The percentage of foreclosed houses in inventory vs. all mortgages is at all all-time high, over 4%. But delinquencies are down 30% from a year ago.
Delinquencies are now averaging 631 days — almost two years since the final payment. This means that owners can accumulate enough money to make a down payment after they are evicted.Their credit may be bad, but they can work a deal with someone who is selling a mortgage-free house.
Some states require a judge to decide to allow a foreclosure. In these states, the foreclosure process is slow. Foreclosure rates are four to five times faster in non-judicial states.
It is clear that the market remains in poor shape. A recession will send delinquency rates higher. Lenders will not be able to collect or evict. This means bad news for lenders. But if there is no recession, then the process in judicial states will still drag on.