According to a Fitch Ratings report, reflecting the impact of last year's robo-signing scandal, rising foreclosure start rates will add to the distressed property inventory driving home prices down further.
More than 10% of severely delinquent loans in private-label residential mortgage-backed securities are now moving into foreclosure each month, the ratings agency said. That's nearly double the rate from a year ago when the moratoria instituted by lenders and servicers in the wake of the robo-signing debacle were in place. It's also edging closer to the 14% rate seen between 2000 and 2010.
Home prices are expected to dip another 10% before they stabilize, due to an increasing inventory of distressed homes. Home prices dropped around 1% in September from August and 4.1% from a year ago, according to a CoreLogic report Monday.
Foreclosures are taking an average of eight months to close in nonjudicial states and 15 months in judicial states.
While the rate increased about 25% on borrowers who have missed between three and six payments, the foreclosure rate nearly doubled on borrowers delinquent for more than six months.
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