No one ever buys a home with the intention of one day losing it to foreclosure or being forced by circumstance into a short sale. Unfortunately, that is exactly the situation in which many homeowners find themselves. Financial struggles push thousands of homeowners into short sale or foreclosure every year. When the housing market collapsed in 2008-09, many found themselves upside-down in their mortgage and opted to simply walk away, leaving the bank to foreclose on the property and sell it for whatever a buyer would pay.

What many homeowners fail to realize is that repossession of a home through foreclosure does not necessarily release the homeowner from his or her financial obligation. Nor does a short sale always alleviate the debt owed to a lender. When a bank or other lender takes possession of a home through foreclosure, the objective is to sell the home to recover the balance owed on the mortgage. Often, the realized sale price may be less than the balance of the mortgage. Likewise, when a house is sold under short sale, the homeowner sells for less than what is owed, leaving a balance due to the lender.

Debt Liability and State Laws

So, what happens to the difference between what is owed and what the home sells for in a foreclosure sale or short sale? Typically, the homeowner is liable for the difference, known as the deficiency.  In some states, that debt can follow the homeowner for up to 20 years. Depending on state laws, the lender may have the right to pursue a legal judgment against a borrower for any deficiency, commonly known as a deficiency judgment. With or without a legal judgment, the lender can sell the debt to a third party collection agency, who can then pursue legal action against the borrower.

State laws regarding deficiency judgments vary. For example, Minnesota allows deficiency judgments, provided certain conditions are met. Lenders must meet different criteria, depending on whether the property is residential or agricultural. Additionally, lenders must file for a judgment within a specific time frame after the sale.  Most other states allow deficiency judgments, but impose limitations on types of mortgages, house size, time allowed between sale and filing, or other conditions. Few states bar deficiency judgments, although many require that a lender declare their intention to pursue a deficiency claim.

It’s Up to the Lender to Choose

Aside from state laws, the choice to pursue any difference between sale price and amount owed is up to each lender. Not all lenders pursue deficiency judgments against all borrowers, but rather use the threat as a deterrent against default. The Department of Housing and Urban Development (HUD), for example, mentions the possibility of a deficiency judgment in a pamphlet about avoiding foreclosure.  In many cases, lenders do not pursue deficiency judgment due to the time and expense involved in collecting the debt, not to mention the unlikelihood of receiving payment.

In 2009, the Federal Reserve Bank of Richmond conducted an extensive study regarding lenders and deficiency judgments. Specifically, the study created a model by which to determine how often lenders utilized deficiency judgments and how such practices affected borrower decisions to default. According to the study, the use of deficiency judgments is rare. This is partly due to regulations on time, fair market value and other state laws that make the process onerous and expensive for lenders. Furthermore, lenders typically pursue other, less expensive means to gain possession of a home in default, such as a voluntary surrender or conveyance of the property, known as a deed-in-lieu.

Ideal Candidates for Pursuing a Judgment

Although not always the case, lenders typically reserve pursuing a deficiency judgment, and the legal expenses involved, for only those borrowers from whom the lender can actually recover. For example, borrowers with considerable wealth are more likely to pay a deficit to protect other assets. Such borrowers are also less likely to file bankruptcy to escape paying the judgment, as this could result in forfeiture of assets. According to the Federal Reserve study, wealthy borrowers are also the most likely to respond to threats of deficiency judgment when facing default, with many opting for friendly foreclosures or short sales, as opposed to simply walking away from a property or contesting a foreclosure.

Wealth is not the only factor in whether a lender chooses to pursue deficiency. If the homeowner causes intentional damage to the home, by removing built-in appliances, cabinetry, major home systems, or otherwise vandalizes the home prior to foreclosure, the lender may pursue on the basis of waste. Many states protect lenders from unnecessary cost resulting from waste, but require including such damages as part of a deficiency judgment.

How to Avoid a Deficiency Judgment

Even though statistics show lenders rarely pursuing deficiency judgments, few homeowners are willing to risk whether their lender will pursue or not. In states with no recourse for lenders, borrowers are more likely to default, at a rate of more than 60 percent. These borrowers may have little regard for any balance remaining after the sale, owing to state restrictions. However, in states that do have recourse, borrowers are advised to address the issue of deficiency with their lender before the home is sold.

For example, with a short sale, the borrower must get the lender’s release in order to sell for less than what is owed on the home. As part of that release, the borrower can negotiate forgiveness for any deficiency. Likewise, homeowners can negotiate a non-judicial foreclosure, such as a deed-in-lieu, and also obtain deficiency forgiveness, prior to surrendering the home. Homeowners should be aware, however, that there may be income tax liabilities associated with any forgiven debt. The IRS offers information regarding relief from tax liabilities on mortgage debt forgiveness.  Borrowers should be advised to carefully weigh all the risks and benefits, including tax liabilities, before proceeding with any type of foreclosure or short sale.

“GMAC is using bankruptcy to maximize its position in litigation,” said Tirelli. “It will proceed in foreclosures, but for any borrower with a claim against GMAC, they are saying, Sorry, go to NY and file a motion.’”

When Ally Financial’s mortgage unit Residential Capital filed for bankruptcy last week, I had an inkling it would spell trouble for the foreclosure fraud settlement the parent company signed with state and federal regulators. How would individuals get loan modifications in the midst of a bankruptcy proceeding?

Sure enough, the New York Post, which actually has somewhat decent housing coverage on occasion (and often more timely coverage than the “paper of record” New York Times), reports that this bankruptcy has already become a strain on families:

Two weeks ago, a Westchester family had finally reached the end of seven years in foreclosure hell.

Then the plate tectonics of the massive bank that controls their fate shifted. Ally Financial, formerly GMAC, filed Chapter 11 bankruptcy for its troubled Residential Capital mortgage unit last Monday. Ally owes taxpayers roughly $12 billion in bailout money and is majority-owned by Uncle Sam.

Unemployment caused the Westchester family to miss mortgage payments and seek Chapter 13 bankruptcy protection. Now they are in limbo, awaiting approval by the ResCap Chapter 11 judge.

“Resolution is on hold,” said the family’s lawyer, Linda Tirelli, who could not disclose more details because the deal is still pending. “GMAC has sought bankruptcy protection like many of its customers have.”

There are 2.4 million ResCap mortgages nationwide, with a significant amount eligible for the settlement by virtue of being underwater and/or delinquent. I have to suspect that most or all of those cases will simply be put on hold now, for no other reason than Ally has the ability to make that happen.

And of course, the only actions Ally, formerly GMAC, will allow to move forward are the foreclosure actions. So if you’re fighting a foreclosure, that fight goes on. If you were working on a loan modification, or trying to get a principal reduction through the foreclosure settlement, you’ll have to go back to the beginning once the servicer rights are sold, probably to Nationstar, a division of the investment management group Fortress.

Ally maintained that the bankruptcy will have no bearing on any loan modification or settlement work. I can’t see how that’s true.

This is just another of the time bombs that accompany the discretionary housing policies of the Obama Administration. Because of this, banks can simply made snap decisions that impact their customers negatively without any sanction or explanation. Another example: Fifth Third Bank just up and decided not to participate in HARP 2.0, meaning that any current underwater borrower with one of their mortgages is most likely out of luck on negotiating an interest rate reduction.

With a few sentences Fifth Third Bank (affectionately known as 1 2/3 Bank) dropped the number of investors offering HARP 2 by one: “Effective May 14, 2012 on all new loans registered, the LTV for DU Refi Plus and Hasp Open Access has been changed to a maximum of 105%, CLTV and HCLTV remain unlimited. For non-Fifth Third to Fifth Third loans, transferred mortgage insurance will no longer be allowed.”

Oh well! Hope that’s not a problem for anyone.

Belleville, IL (KSDK) - The St. Clair County State’s Attorney’s Office filed a civil suit against 22 banks Monday morning, accusing them of engaging in fraud and deceptive practices by creating an allegedly secretive mortgage database and not properly filing documents with authorities.

In the mid-1990s, many banks and lenders created a holding company called the Mortgage Electronic Registration System (MERS), which then created a private electronic mortgage database system. That database was used to track the transfer of loans between lenders and Wall Street institutions.

Most home loans in the United States are on the MERS database.

According to the St. Clair County State’s Attorney’s suit, the MERS system amounts to a shadowy recording system, “eliminating the homeowners’ and the public’s ability to track the purchase and sale of properties through the traditional public records system.”

The suit goes on to allege that MERS givesfinancial institutions the ability to avoid required transparency and get out of paying local fees. In St. Clair County’s case, those fees are collected by the local recorder of deeds.

The St. Clair County State’s Attorney’s Office identified these banks in their suit: Bank of America, CCO Mortgage Corporation, CITI Mortgage, Corinthian Mortgage Corporation, Everhome Mortgage Company, GMAC ResidentialFunding Corporation, Guaranty Bank, HSBC Finance Corporation, Suntrust Mortgage, Wells Fargo Bank, WMC Mortgage Corporation, Bank of O’Fallon, Compass Mortgage, First Collinsville Bank, FirstCo Mortgage Corporation, First County Bank, Mid America Mortgage Services of Illinois, Mortgage Services III, Midland States Bank, Peoples National Bank, Commerce Bank, Regions Bank and UMB Bank.

KSDK

In 2012, when we think Wall Street we think: MF Global theft, JPM criminality, Goldman naked shorting, DTTC failures to deliver, precious metals manipulation, fractional reserve banking, Comex games, HFT trading and endless derivatives. But don’t forget about MERS and mortgage fraud – because according to Vermont Trotter, the National Director of ‘Protect Americas Dream’ it’s all tied together in one giant Ponzi scheme. The worst part is, the bank you pay for your mortgage probably does not even hold the title to your home. It’s a mess – and we are ALL victims.

Adding new uncertainty in the state’s ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt – on homes they’ve already lost through foreclosure.

Oscar Trejo, pictured here at his current home in San Jose, said he had never heard of Heritage Pacific before it asked a judge not to discharge its $88,000 claim against him.?

Many of these former homeowners believed their mortgage debt had been erased after their houses were taken by banks and lending companies. But the Texas company, Heritage Pacific Financial, has aggressively pursued collections and filed lawsuits claiming those debts still linger.

For Ahmed Abdelfattah of San Jose, debt collectors started calling in 2009, saying he owed Heritage Pacific $135,000. He said he’d never heard of the company before.

“It’s been a nightmare,” Abdelfattah said. “It’s cost me money and time, and they ruined my credit until now.”

Oscar Trejo said his first encounter came a few days before he expected to exit bankruptcy and get a fresh financial start. That was in November 2010, he said. Heritage Pacific sent Trejo, who also lives in San Jose, a letter saying it had asked a bankruptcy judge not to discharge, or erase, its $88,800 claim against him.

Trejo invested in properties in Merced and later lost them all in foreclosures. But he hadn’t done business with Heritage Pacific. “I had never seen the company’s name,” he said.

Heritage Pacific was started by identical twin brothers, Chris and Ben Ganter, who once starred in a reality TV show, “PayDirt,” about investing in the Dallas-Fort Worth real estate market.

The company’s lawsuits often accuse defendants of misstating their incomes on loan applications. While many borrowers did overstate their incomes on applications, consumer attorneys say Heritage Pacific is targeting people who filled out their forms honestly or whose mortgage brokers pumped up their applications without their knowledge.

Critics of Heritage Pacific say the company’s central tactic is forcing settlements from people who can’t afford a drawn-out legal fight and who don’t know the details of California law. The company has sued people with second-mortgage debts of less than $150,000, despite a state law prohibiting lawsuits alleging fraud on mortgages below that amount.

Heritage Pacific’s collection methods now face legal challenges, including a class-action lawsuit in Santa Clara County Superior Court that contends that the company is carrying out an “insidious and illegal debt collection scheme.”

The company doesn’t make mortgage loans, but instead attempts to collect payments on loans originated by others. Heritage Pacific launched its effort in late 2008 when it began buying – at a steep discount – second-mortgage loans that borrowers had stopped paying. Many of the loans were secured by houses that already had been sold in foreclosure by first-mortgage lenders.

By demanding payments from more than 1,000 individuals in California, the lawsuit contends, Heritage Pacific has violated “the rights of those who have already suffered the emotional and financial distress that results from the loss of their foreclosed home.”

Heritage Pacific is nothing more than “people in Texas acting as vultures,” said Will Kennedy, a lawyer in the class-action suit.

In an answer to the lawsuit, Heritage Pacific says it’s not suing “innocent home-owners who, through no fault of their own, lost their homes.” Instead, the company says it targets defendants who “made material misrepresentations to secure large loans upon which they soon stopped paying.”

Fraud claims “are the only ones we’re interested in pursuing,” Chris Ganter, the company’s chief executive and main owner, said in an interview.

But some former homeowners now threatened with legal action by Heritage Pacific dispute these claims. They told California Watch that the income they claimed on their mortgage applications was valid, and they stopped paying because they lost their jobs, their income plummeted, and the banks foreclosed on their houses. Others said they signed applications that had been prepared by brokers.

Rather than shy away from seemingly worthless second-mortgage notes, Heritage Pacific has spent millions of dollars to assemble an inventory of at least 40,000 second-mortgage notes, according interviews with company executives and deposition testimony.

Fraud accusations against former homeowners became Heritage Pacific’s tactic for restoring value to its second-mortgage notes. California law gives a lender that can prove that a borrower fraudulently obtained a loan for more than $150,000 the right to sue. A creditor also may allege fraud to prevent a debt from being erased in bankruptcy.

Abdelfattah, a 52-year-old naturalized American who was born in Egypt, said it wasn’t fraud, but a steep drop in his income as a sales manager at a local Honda dealership, that caused him to fall behind on his monthly house payments of $5,000.

In 2008, the holder of his first mortgage foreclosed on the three-bedroom, 1,170-square-foot Santa Clara house that he had purchased in 2005 for $675,000.

But to his chagrin, Abdelfattah found that foreclosure didn’t end his house-related financial woes. As the summer of 2009 faded, he started getting collection calls from two or three individuals representing Heritage Pacific. They wanted him to pay a portion of the $135,000 balance they said he still owed on the second-mortgage loan he had used in his house purchase.

The callers were “really annoying,” Abdelfattah said. One was “really aggressive, cursing on the phone.” They accused him of never having lived in the house. They sent him a letter asking him to verify his income, and another titled, “Demand for Payment of Outstanding Debt.”

In May 2010, Heritage Pacific named Abdelfattah in a lawsuit that claimed that he had used fraud to obtain a second mortgage. But on March 19, a Santa Clara County Superior Court judge threw out the company’s claim against Abdelfattah because the alleged fraud had involved a loan for less than $150,000.

Abdelfattah, who wants to buy a house, was only somewhat relieved: “They are not able to sue me, but (Heritage Pacific’s claim) still affects my credit.” Abdelfattah’s countersuit alleging violations of debt-collection law by Heritage Pacific is scheduled for a jury trial in July.

Heritage Pacific can ignore the prohibition on pursuing fraud claims related to loans for less than $150,000 because it still can get default judgments and out-of-court settlements from some defendants, said Kennedy, the attorney in the civil action.

Kennedy acknowledged that the company is probably “able to find inflated incomes without too much problem, on a lot of them (but) not all of them.” But that’s only part of the story, Kennedy stressed: “The banks knew exactly what was going on.”

Heritage Pacific’s first big foray into California came in U.S. District Court in Los Angeles, where in a three-month period beginning in December 2009, Heritage Pacific filed three lawsuits seeking $46 million in actual and punitive damages from 158 defendants who took out 143 loans.

Meanwhile, Heritage Pacific opened another front in California state courts. California Watch reviewed online records in 10 of the state’s 17 largest counties and found 365 lawsuits in which Heritage Pacific was a party. Heritage Pacific also has filed 226 cases in federal bankruptcy courts in California.

In the meantime, regulators in Arkansas have cracked down on Heritage Pacific’s fundraising. The Arkansas Securities Department found that in September 2010, four Arkansas investors paid $50,000 each to buy bundles of second mortgages from Heritage Pacific, and the buyers signed separate deals to pay Heritage Pacific to collect and distribute payments from their mortgages.

In December 2011, the securities department issued a cease-and-desist order directing Heritage Pacific to stop selling unregistered securities.

Ganter said that Heritage Pacific had not agreed to a settlement and that the case was “not finished up.”

Campbell McLaurin, an attorney for the Arkansas Securities Department, said he believed that his state was “not unique as far as (Heritage Pacific) seeking investors.”

California Watch

MORTGAGE UNIT TROUBLES ALLY FINANCIAL

WHEN General Motors was bailed out, the government sank $17 billion of taxpayers’ money into G.M.’s troubled finance arm, GMAC.

Three years on, we’re still waiting for the payback.

While the Treasury Department sold most of its holdings in G.M. last year, it unloaded only a small portion of its stake in GMAC, which is now known as Ally Financial. Taxpayers today own roughly a quarter of G.M., but they still own 74 percent of Ally.

G.M. is making a lot of money (last week, it reported a first-quarter profit of $1.32 billion) but all is not going smoothly at Ally. While the company’s overall numbers are improving, its mortgage unit is in deep trouble.

That unit, Residential Capital, missed a $20 million debt payment in mid-April. Given that it has roughly $300 million in debt payments coming due from now till June, speculation is rife that ResCap will file for bankruptcy.

Rest here…

“The banks never want to take ownership,” he said. “They have to pay the fees going forward. The costs are considerable.”

Even McGrady, the Pinellas-Pasco judge, believes money is behind the canceled sales.

“After a while, you begin to question their motives,” the judge said.

~

CANCELED FORECLOSURE SALES SADDLE NEIGHBORS, HOAS WITH EXPENSES

The foreclosure crisis has littered the region with thousands of abandoned homes. The houses sit idle as banks have been slow to seize them in the final stage of the foreclosure process, the public auction.

Although recent headlines proclaim the worst of the housing crisis is over, the decrepit homes are a constant reminder that cleaning up the foreclosure mess remains a work in progress.

The house on Lane’s street in Lithia went into foreclosure in 2008 and has been vacant for more than a year. Aurora Loan Services had set an auction for February but canceled it.

It’s an oft-repeated pattern.

In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.

The repeated cancellations burden the court system.

“These never seem to go away,” said Thomas McGrady, chief judge of the Pinellas-Pasco County Circuit. “It’s a nuisance.”

Taxpayers also pay for the delays.

Be sure to check this one in full here…

Since then, those banks along with JPMorgan Chase & Co. (JPM), Deutsche Bank AG and Morgan Stanley have bypassed S&P’s credit ratings as they issued $11.3 billion of debt linked to skyscrapers, shopping malls and hotels, according to data compiled by Bloomberg. They’re turning to Kroll Bond Ratings Inc. and Morningstar Inc. (MORN) after S&P, the world’s largest credit- rating company, forced bankers to pull an offering they’d already committed to sell, roiling the $600 billion market.

“S&P no doubt suffered an extraordinary loss of credibility in this area that will take time and some restructuring to repair,” said Chris Sullivan, who oversees $1.9 billion as chief investment officer at United Nations Federal Credit Union. “It utterly surprised people.”

Wall Street banks and investors are demonstrating the possibility of competition in the ratings business, even as regulators struggle to break S&P, Moody’s Investors Service and Fitch Ratings’ stranglehold on other bond markets. Four years after the three firms were blamed by regulators for fueling the financial bubble by inflating their grades for toxic mortgage securities, they provide 97 percent of all credit ratings, the Securities and Exchange Commission said in a September report.

‘Ultimate Success’

Ed Sweeney, a spokesman for S&P, said the New York-based company’s CMBS analysts weren’t available to discuss the situation. “We believe our ultimate success will be based on the value investors derive from the ratings and research,” he said in an e-mail.

Ranking structured products such as CMBS and collateralized debt obligations is one of the most lucrative areas for rating firms. They generally charge between $1 million and $2 million to grade a CMBS deal, which are bundled loans tied to commercial properties sliced into securities of varying risk, according to a September paper by Andrew Cohen, a researcher at the Federal Reserve.

The lack of an S&P rating isn’t hurting issuers. Deutsche Bank priced the safest portion of a CMBS deal last week ranked AAA by Fitch and Moody’s to yield 110 basis points, or 1.1 percentage points, more than the benchmark swap rate, the tightest spread since May. Banks are forecasting as much as $45 billion of sales this year, up from $28 billion in 2011.

About one-third of investors polled in a Deutsche Bank survey said they preferred deals without an S&P ranking, the Frankfurt-based lender said in a Feb. 27 report. About 15 percent said they look forward to those rated by the new entrants. More than half said the rating companies didn’t play a role in their investment decisions.

Pulled Ratings

S&P (MHP)’s decision to pull its ratings on the $1.5 billion offering in July interrupted the market’s recovery after issuance seized up in 2008. A record $232.5 billion was sold in 2007 before losses on home-loan securities froze credit markets.

S&P withdrew rankings on the deal on July 27 and temporarily stopped rating new commercial-mortgage bonds, saying it had to review a potential conflict in its model. The following month, it said it would resume grading deals and that the conflict had turned out not to be significant.

The banks were forced to cancel the transaction five days after it was placed with investors. Goldman Sachs reimbursed buyers for losses they incurred when the deal was withdrawn, people familiar with the transaction said at the time.

Morgan Stanley analyst Richard Parkus called the event “unprecedented,” and said that it “severely eroded” investor and issuer confidence in S&P’s ratings.

Charlie Brown’s Football

“You look to rating companies for predictability and a degree of certainty,” said Patrick Sargent, a partner at law firm Andrews Kurth LLP in Dallas. “It was like Lucy pulling the ball away fromCharlie Brown.”

This wasn’t the first time S&P riled investors and banks in the CMBS market. It downgraded dozens of top-ranked bonds in 2009, excluding them from the Federal Reserve’s $1 trillion Term Asset-Backed Securities Loan Facility designed to cleanse bank balance sheets and jumpstart lending. They backtracked on some of the securities a week after reducing them to BBB-, the lowest investment-grade ranking, saying there had been an adjustment on the assumptions on the timing of losses on the mortgages.

‘Inconsistent Approach’

Investors still hold a grudge, according to Darrell Wheeler, a commercial-mortgage debt strategist at Amherst Securities Group LP.

“Given their inconsistent approach to ratings and an unreceptive investor audience, it is difficult to see the upside for an issuer including S&P in a deal,” Wheeler said.

Two weeks after S&P antagonized CMBS bankers, it downgraded the U.S., setting off a stock-market swoon and drawing criticism from President Barack Obama. Treasury yields then fell to record lows. The company later sent, then retracted, an erroneous message suggesting Francehad been downgraded. The backlash may have prompted parent company McGraw-Hill Cos.’s decision to replace the unit’s top executive, according to Peter Appert, an analyst at Piper Jaffray & Co.

“You’ve had a series of miscues,” Appert, who’s based in San Francisco, said in a telephone interview. “Under their new leadership, they’re taking some significant and proactive steps to address these issues.”

McGraw-Hill fell 0.5 percent to $46.15 at 9:44 a.m. in New York. It’s up about 3 percent this year.

New President

S&P announced it had hired Douglas Peterson, a former Citigroup executive, as president, in August, and in December, he replaced David Jacob, head of structured finance, and reassigned Mark Adelson, chief credit officer, to a research role with less responsibility. The two had been involved in the decision to withdraw the CMBS ratings, according to three people familiar with the matter, who declined to be identified because the deliberations were private. Barbara Duka, who was in charge of CMBS ratings at the time of the July deal, was removed from her position this year, one of the people said.

Wall Street has issued 10 so-called CMBS conduit deals since the review, none of which have been ranked by S&P. The firm’s market share plummeted to 26 percent of last year’s deals from 43 percent in 2010, according to Commercial Mortgage Alert, a newsletter. Morningstar picked up some of the business, rating 30 percent of deals, while Kroll evaluated 14 percent. Goldman Sachs and Citigroup resuscitated the pulled deal in September with ratings from Moody’s, Fitch and Morningstar.

“We didn’t think we would get on as many transactions as we did last year,” Eric Thompson, Kroll’s head of CMBS in New York, said in a telephone interview in February. “We view it as an indicator of folks in the marketplace looking for a fresh voice.”

To contact the reporters on this story: Sarah Mulholland in New York atsmulholland3@bloomberg.net; Zeke Faux in New York at zfaux@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net; Rob Urban at robprag@bloomberg.net

Approximately 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the national foreclosure inventory as of March 2012 compared to 1.5 million, or 3.5 percent, in March 2011 and 1.4 million, or 3.4 percent, in February 2012. The number of loans in the foreclosure inventory decreased by nearly 100,000, or 6.0 percent, in March 2012 compared to March 2011.

“The overall delinquency level was unchanged in March, remaining at its lowest point since July 2009,” said Mark Fleming, chief economist for CoreLogic. “Non-judicial foreclosure markets like Nevada, Arizona and California are experiencing significant improvements in their shares of delinquent borrowers. Some judicial foreclosure states are also improving, like Florida, but not to the extent of non-judicial markets.”

 

While the national foreclosure inventory decreased year-over-year last month, New York and New Jersey were a couple of the states that saw an increase, putting them among the five states with the highest foreclosure rates, according to data released today by CoreLogic. Florida ranked first with a 12.1 percent foreclosure inventory rate, New Jersey came in second with 6.6 percent while New York came in fifth with 4.9 percent.

New York’s foreclosure inventory rate marks an 0.8 percent increase from March 2011. There were a total of 3,681 completed foreclosures in the state for the year ending March 2012.

In the New York City-White Plains, NY-Wayne, NJ region, CoreLogic recorded a 5.5 percent foreclosure inventory rate for March 2012 — a 0.4 percent increase from March 2011. The regional 90-plus day delinquency rate stayed roughly the same in March 2012 as the state-wide tallies, coming in at 8.7 percent, which is a 0.2 percent increase from March 2011. Year-over-year, there were a total of 838 completed foreclosures.

As The Real Deal previously reported, the December 2011foreclosure and delinquency rates for the same regions set a new record. The other states of the five with the highest foreclosure rates were Illinois at 5.4 percent and Nevada at 4.9 percent, according to CoreLogic. — Zachary Kussin