• 11
  • February

It is no secret that the foreclosure rate is still on the rise, and 2010 saw a record number of homeowners facing the devastating reality of losing their homes. During 2010, we also saw the unscrupulous "robo-signing" practice that may have illegally taken property away from many homeowners.

Amid all of this is an interesting detail: homeowners were significantly more behind on payments by the time the foreclosure process was completed in 2010 than they were in 2009. In Florida, lenders waited until homeowners were already an average of 349 days late on mortgage payments to begin the foreclosure process in 2010. At the end of the foreclosure process, homeowners nationwide were an average of 507days late on payments.

One senior vice president with the Florida mortgage company Lender Process Services Inc. said that the "sheer volume of loans going through the [foreclosure] system" is a major contributing factor to the increased length of time before the foreclosure process begins. It simply took many lenders 100 days longer to get around to issuing foreclosure notices in 2010.

The same individual also speculated that the robo-signing debacle has led to an "abundance of caution" on the part of lenders. The increased length of time between default and final foreclosure may indicate that lenders are increasingly paying closer attention to homeowner's rights during the foreclosure process. Lengthening the foreclosure process offers homeowners more opportunity to find solutions that could stop foreclosure.

For Florida homeowners, this information is particularly important. The state led the nation last year in terms of how many homeowners were behind on their mortgage payments. Nearly a quarter of all Florida mortgage-holders were delinquent to some degree last year.

Source: Bloomberg, "U.S. Homeowners in Foreclosure Process Were 507 Days Late Paying," John Gittelsohn, 7 Feb 2011