Foreclosure Process

Foreclosure-to-REO Roll Rates Fall Dramatically on Robo-Signing Delays

Posted on Wednesday, January 19, 2011

Recent data from Barclays Capital examines the ramifications of the fourth quarter foreclosure debacles on REO roll rates.
Data released Friday shows the foreclosure-to-REO rate dropped 57 percent in judicial states the last few months of 2010, and dropped 42 percent in the non-judicial states.
In New York, the roll rate ground to a near stop, dropping a whopping 91 percent in December when compared to the rate from January to October 2010.
The New Jersey rate dropped 73 percent during the same period.
The New York-based firm says the substantial drop in New York rates can most likely be attributed to the October ruling that mandated lenders’ foreclosure attorneys must file an affirmation with the court certifying that foreclosure documents filed have been reviewed and verified for accuracy.
The report also reveals that some servicers have shown dramatic drops in roll rates while others have shown insignificant drops and even increases in roll rates.
Bank of America/Countrywide experienced a 94 percent drop in the last two months of 2010. By contrast Saxon increased 57 percent, and Citi increased by 5 percent.
As continued judicial scrutiny and lawsuits by borrowers are expected to continue, Barclays’ projection is that the foreclosure to REO rate will not be stable for several quarters. Eventually, though, the process will become more streamlined, as judgments get handed down and documentation issues begin to clear.
But, the report warns, “If there are indeed widespread issues and foreclosures cannot be carried out, this would likely have a chilling effect on home sales and new mortgage lending in the US. The implications of lenders’ not being able to foreclose on defaulted loans would affect their willingness to lend and the rates charged to borrowers.”
By: Joy Leopold, DS News

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