The document processing problems plaguing the mortgage servicing industry could cause some foreclosures to take up to 10 years, according to Mark Zandi, chief economist for Moody's Analytics.
Commenting on foreclosure moratoria affecting the mortgage divisions of Ally Financial and JPMorgan Chase, Zandi told The Washington Post that moratoria and legal challenges could delay the foreclosure process and lengthen property seizures, on average, to three to 10 years in some instances.
Thursday morning Zandi could not be reached for follow up comment.
Mortgage and housing economists expect four to six million new foreclosure filings over the next two years, citing a step up in activity from the nation's largest servicers as well as Fannie Mae and Freddie Mac. Many of these players in the mortgage industry are losing hope in the success rate of loan modifications, foreclosure vendors told ASR's sister publication National Mortgage News.
In states where judicial foreclosures are the law — such as Florida — processing times take longer because a judge's approval is needed and the courts are flooded with a backlog of cases, and a growing number of legal challenges. The publicity surrounding Ally's and JPM's problems are expected to delay foreclosures even further as more class action attorneys target the sector and file new lawsuits.
One investor in nonperforming loans told NMN that he estimates that in Florida, if a mortgagor files for bankruptcy, he can stay in the home for as long as four years.