“Five major U.S. banks accused of foreclosure abuses have agreed to a $26 billion settlement with the government, the largest payout from banks arising from the financial crisis. The amount, which will include aid from banks in the form of loan forgiveness and refinancing, is intended to help homeowners avoid mortgage default and foreclosure. Most economists believe this is a step in the right direction, albeit only a small one.
“Homeowners in at least 49 states represented in the agreement will benefit, though some states have more homes in trouble than others. California, one the hardest-hit states in the foreclosure crisis, will reportedly receive mortgage relief of up to $18 billion. Based on Corelogic’s national foreclosure report released yesterday, 24/7 Wall St. identified the states with the highest foreclosure rates.
“Many of the states with the highest foreclosure rates experienced the worst of the housing crisis. However, analysis by 24/7 reveals that the primary driver of higher foreclosure rates is a lengthy foreclosure process.
“Nearly all of the states with the highest rates also have the longest foreclosure periods. The average foreclosure process for the nation is 140 days. The average foreclosure process for the eleven states with the highest foreclosure rates is 220. As a result, many homes foreclosed in 2011 in these states were actually at the end of a process that began more than a year ago. New York, one of the states with the worst foreclosure rates, has an average processing period of 445 days.
“The reasons why the foreclosure processing period is longer in these states is because it usually involves the court system. Judicial foreclosures are handled by the court and usual include filing motions and seeking a final judgement from a judge. Nonjudicial foreclosures, which tend to take less time to process, are governed by state law and do not require court intervention. Nine of the 11 states with the highest foreclosure rates have a judicial-only foreclosure process.