As the foreclosure backlog continues to build up, delinquent borrowers are spending even more time in their homes without making mortgage payments.
Once borrowers start missing payments, they spend an average of a year and nine months, or 611 days, in foreclosure before banks repossess their homes, according to LPS Mortgage Monitor. That's more than twice as long as three years ago, when the average was 251 days. Earlier his year, the average was 523 days.
"The number of defaults in the pipeline has been huge and we had more problem loans than ever before," said Herb Belcher, who supervises analytics for Lender Processing Services (LPS), which provides mortgage industry information and analytics to big banks.
With so many bad loans, servicers have had to prioritize which ones they can deal with and which ones to push aside.
"It's like your boat has all these holes in it and is taking in water. You have to plug up the worst holes first," said Belcher.
Squatter nation: five years with no mortgage payment
The bottlenecks are particularly severe in judicial states where the foreclosures are processed through the courts, he said. In non-judicial states, where trustees handle the cases, the average foreclosure is six months shorter.
Fannie Mae and Freddie Mac, which account for the majority of all mortgage lending these days, have been actively lobbying their industry partners -- the servicers and attorneys who handle the foreclosure process -- to either quickly get paperwork filed and push defaults through the system or put borrowers into a foreclosure prevention program, said Belcher.
The industry has gotten better at dealing with the deluge; it has hired staff and refined procedures to improve efficiency. But a return to more normal processing times will take time given the enormous backlog.
There were more than 4 million homes either in foreclosure or 90 days or more late with payments in August. Many of the new delinquencies are actually repeats: About 75% of the borrowers who fell a month behind in payments in August had missed payments before and then caught up -- only to fall behind again.