Housing

How Long Does Foreclosure Take?

Since the housing market fell apart, the time people spend in foreclosure has gone way up.

As the chart below shows, "judicial foreclosures" — those in states where foreclosures go through the courts — now take an average of 271 days, or about nine months.

Judicial foreclosures are the ones at the center of the "robo-signer" foreclosure mess. So as banks change their practices in response to the scandal, we may see the time to foreclosure rise even more in those states.

Foreclosures that don't go through the courts move somewhat faster — but still take more than six months, on average:

We saw this long lag time in many of the mortgages in Toxie, our (now deceased) toxic asset. When we looked at Bloomberg data on mortages in toxie, we saw a lot of lines like this:

FFFFFFFFF9999999999963CC

That's the history of a single mortgage. You read it from right to left, and each letter or number represents a single month.

"C" means a month where the person is current. "3" means 30 days past due, "6" means 60 days past due, and "9" means 90 days or more past due. "F" means the house is in foreclosure, but has not yet been resold.

So after 13 months of not paying the person gets a foreclosure notice (that’s the F), and that's where the clock starts on "days in foreclosure." And when we got this data the foreclosure was still making its way through the system an additional 9 months later.

Note: GMAC Mortgage, one of the lenders at the center of the foreclosure scandal, is owned by Ally, a Planet Money sponsor.

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