Wells Fargo, Chase see improvement, REO is Stationary
Wells Fargo and JPMorgan Chase have reportedly decreased their foreclosure timelines by about 100 days for some of the most awful mortgages carried in the third quarter, says a report from Moody’s Investors Service. In 2010, in county courthouses, mortgage servicers were being investigated and began correcting mishandled documents. Although corrections are still being made to this day, servicers seem to be making some progress considering a settlement with federal agencies and state attorneys is near.
"Although pending foreclosure volumes remain high for all product types, foreclosure sale timelines improved from the second quarter, as judicial states continued to work through their significant backlogs of foreclosed loans," Moody's said. Completed foreclosure sales which were in backlogged states like New York, Nevada, California, Florida, Illinois, and Pennsylvania, seem to have caught up. JPMorgan Chase and Wells Fargo have proven to have made the most progress in the cutting back timelines. Subprime mortgages show Chase averaged 264 days from referral to foreclosure in the third quarter, which is a bid decreased from 412 days in the previous 3 months. However, Chase did have the shortest amount of time out of all five large servicers.
Wells Fargo saw a decrease in their foreclosure timeline by 314 days from 425 days in the third quarter. GMAC and Ally Financial were compared and estimated to have taken and average of 550 days to move a loan through foreclosure. Wells Fargo and JPMorgan Chase slashed timelines on Alt-A and jumbo products as well. Chase put in 265 days to foreclose on loans which were down 376 from the previous quarter. Wells Fargo took an estimated 304 days, which was also down from 430. When it comes to jumbos, Wells Fargo is quick, averaging 207 days to foreclose, down from 273.
However JPMorgan Chase seems to be making the largest improvements by taking an average of 258 days to foreclose in the third quarter, which has decreased from 340 in the previous period. "Servicers completed their robo-signing reviews and are no longer holding up foreclosure sales, which is clearing out their pipelines somewhat," Moody's said. "Chase and Wells decreased their foreclosure sale timelines significantly." While servicers continue to make their improvements, inventories keep on growing due to the time it takes to sell REO lengthens. "Our outlook is that REO timelines will lengthen dramatically over the next year, hampering servicer efforts to expedite their foreclosure procedures as they try to maximize return to investors," Moody's said. "Given the significant number of loans in foreclosure, an increase in REO volume is inevitable."