Real Estate Journal Online

According to a regional housing market analysis released by the Federal Reserve Bank of New York this week, one in every 10 residential mortgages in New York City is “seriously delinquent,” meaning that it is more than 90 days overdue[1]. And in some areas of the region, like Long Island, more than 10 percent of all the mortgages are seriously delinquent, resulting in foreclosure rates as high as 6.6 percent. While this delinquency rate certainly is disturbingly high, it may be partially due to the massive backlog of foreclosure cases in New York, which is a judicial foreclosure state. Currently, the state itself has a backlog of 80,000 foreclosure cases and a shadow inventory that is likely to take 154 months to clear, according to Standard & Poor[2]. To further complicate matters, according to the study, fully half of the seriously delinquent loans in NYC have not yet reached the foreclosure process yet, probably due to a variety of factors including last year’s robo-signer fiasco and current controversial rulings on how MERS (mortgage electronic registration system) foreclosures should be handled. (You can read more on that here.) New rulings on how banks and loan servicers verify documentation in foreclosures are also likely adding to the time that it takes to conduct a foreclosure process and possibly interfering with lenders’ ability to foreclose when the necessary documents are not readily available[3].

Sarah Ludwig, founder of housing advocacy group NEDAP, says that she believes that judicial rulings have “definitely sent out a message to the industry and put the brakes on the filing of foreclosure actions.” However, she adds, given that delinquency rates are not actually declining, “we’re very far from through this crisis.” New York City is known for its resilient real estate market. Do you think it can pull through this current crisis?

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