Pace of foreclosures slowed further in April (AP)

LOS ANGELES – Fewer Americans had their homes repossessed by banks or were put on notice for being behind on their mortgage payments in April compared to a year ago.

That would ordinarily suggest improving fortunes for U.S. homeowners, but the decline had less to do with any turnaround in the housing market than with foreclosure processing delays that appear to be getting worse. That is threatening to drag out a housing recovery, foreclosure listing firm RealtyTrac Inc. said Thursday.

It's taking longer for lenders to move against homeowners who have stopped paying their mortgage and to take back homes already in some stage of the foreclosure process. In states like New York, for example, it now takes an average of more than two years for a home to go from the initial stage of foreclosure to being repossessed by a bank, the firm said.

Those delays, partly due to banks working through foreclosure documentation problems that came to light last fall, means it could take many more years for lenders to deal with a backlog of seriously delinquent properties, which numbers up to 3.7 million, by some estimates.

"It's going to take between three to four years just to get those loans into foreclosure at our current pace," said Rick Sharga, a senior vice president at RealtyTrac. "And that doesn't spell good news for the housing market."

Banks repossessed 69,532 homes last month, down 5 percent from March and down 25 percent compared with April of last year, according to RealtyTrac, which tracks warnings sent to homeowners throughout the foreclosure process.

The number of properties receiving an initial notice of default fell to 63,422, down 14 percent from March and down 39 percent from April, 2010.

Homes scheduled for auction for the first time also declined in April, falling to 86,304. That's down 7 percent from March and 37 percent below April of last year.

A weak housing market, sliding home prices and pressure on lenders to give troubled homeowners more time to work out new payment arrangements or loan terms have all contributed to the longer time frame for foreclosures.

Many banks also have taken steps to revisit thousands of foreclosure cases since last fall, delaying the processing of new foreclosures. The logjam has been compounded by court delays in states like Florida, New York and New Jersey, where foreclosures must be approved by a judge.

In the first three months of this year, it took an average of 400 days for a U.S. home to go from receiving an initial notice of default to being foreclosed on, RealtyTrac said.

That's up from an average of 340 days in the same period last year and more than double the 151-day average in the first quarter of 2007.

The delays are even lengthier at the state level. In New York and New Jersey, the foreclosure process took more than 900 days, on average, to run its course in the first quarter — more than three times the average length of time in the first quarter of 2007 for both states.

In Florida, one of the states hardest hit by the foreclosure crisis, the process took an average of 619 days in the first quarter, up from 470 days a year earlier. In the first quarter of 2007, it took an average of 169 days for the process to play out, RealtyTrac said.

Barring a pickup in the pace of foreclosures, it is likely fewer homes will be repossessed this year than in 2010, when lenders took back more than a million, Sharga said.

Despite the drop in foreclosure activity last month, several states continue to have outsized foreclosure rates.

Nevada had the highest foreclosure rate in the nation, with one in every 97 households receiving a foreclosure notice in April. It also bucked the overall national trend, as bank repossessions jumped 23 percent from March and climbed 12 percent from April of last year, RealtyTrac said.

Lenders may have elected to pick up the pace of foreclosures in Nevada to take advantage of brisk foreclosure sales in Las Vegas. In March, sales of previously occupied homes in Las Vegas hit a five-year high, with distressed properties accounting for 69 percent of sales, according to DataQuick.

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U.S. foreclosure deal slowed by infighting: sources (Reuters)

CHARLOTTE, N.C./WASHINGTON (Reuters) – U.S. regulators' efforts to settle with banks over improper mortgage foreclosures are being hampered by disagreements among the groups involved over the size and shape of an accord, according to sources familiar with the matter.

Banking regulators and a coalition of state attorneys general are trying to forge a settlement with the largest U.S. banks, which have been accused of foreclosing on borrowers without having the necessary paperwork in place.

A settlement would relieve a potentially large legal liability and reputational black eye for the banks, as they could face a myriad of lawsuits and fines without a universal agreement.

Sources familiar with the talks say the various groups disagree on the parameters of a settlement, with bank regulators pushing to outline a settlement plan as soon as mid-March.

Analysts said the discussions highlight the difficulties of reaching a universal settlement as disparate groups are involved in the negotiations.

"It is herding cats, there's no question about it, and they are not always the most agreeably tempered cats," said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a firm that advises on regulatory policy.

For example, the members of the Treasury team setting up the new Consumer Financial Protection Bureau, along with the Federal Deposit Insurance Corp, have been pushing for a larger financial settlement than the Office of the Comptroller of the Currency, the sources said.

The Federal Reserve appears to be somewhere in the middle and has not backed the OCC's approach, as regulators continue to focus on the size of the penalty for improper foreclosures.

Spokesmen for several of the federal agencies involved in the talks were not immediately available for comment.

U.S. Department of Housing and Urban Development spokeswoman Melanie Roussell and OCC spokesman Bob Garsson declined to comment.

Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, said on Wednesday that the attorneys general were "approaching a very sensitive time of negotiations."

Miller is spearheading the 50-state attorneys general probe into mortgage lenders' foreclosure practices.

"There are a number of federal agencies involved here, and not all agencies have the same ideas of where they should go," Greenwood said, adding that it "may not be accurate" that any universal settlement would apply the same language to all parties, including the attorneys general.

He declined to comment on what specific remedies the attorneys general coalition would seek, or the status of the group's investigation.

One proposal being pushed by negotiators looking for the biggest settlement, such as the incoming consumer agency, would have the attorneys general and federal agencies signing off on what would amount to about a $20 billion settlement, according to a source familiar with the matter.

That number was first reported by The Wall Street Journal on Tuesday.

There is, however, no agreement on that figure among all regulators involved who continue to debate the issue.

Another question regulators are wrestling with is whether and how much of the settlement should go toward helping struggling homeowners.

The homeowners' aid could be either principal forgiveness for qualifying borrowers or loan modifications, the source said. But how to structure the plan so banks would have to follow it is another challenge.

It is unclear how much aid any agreement would provide to consumers, particularly as some lawmakers are seeking to repeal existing aid programs.

On Thursday, U.S. House Republicans said the House Financial Services Committee would vote on a bill on March 3 that would end the Home Affordable Modification Program, the Obama administration's key foreclosure rescue program.

Last fall, the biggest U.S. mortgage lenders -- including Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Ally Financial Inc's GMAC Mortgage -- temporarily halted or refiled paperwork on foreclosures nationwide.

The attorneys general probe into the matter began soon after, and the Securities and Exchange Commission, the Department of Justice and bank regulators have opened their own inquiries.

(Additional reporting by Scot Paltrow, Corbett Daly and Rachelle Younglai in Washington and Dan Levine in San Francisco; editing by John Wallace, Gerald E. McCormick and Matthew Lewis)

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U.S. foreclosure deal slowed by infighting: sources (Reuters)

CHARLOTTE, N.C./WASHINGTON (Reuters) – U.S. regulators' efforts to settle with banks over improper mortgage foreclosures are being hampered by disagreements among the groups involved over the size and shape of an accord, according to sources familiar with the matter.

Banking regulators and a coalition of state attorneys general are trying to forge a settlement with the largest U.S. banks, which have been accused of foreclosing on borrowers without having the necessary paperwork in place.

A settlement would relieve a potentially large legal liability and reputational black eye for the banks, as they could face a myriad of lawsuits and fines without a universal agreement.

Sources familiar with the talks say the various groups disagree on the parameters of a settlement, with bank regulators pushing to outline a settlement plan as soon as mid-March.

Analysts said the discussions highlight the difficulties of reaching a universal settlement as disparate groups are involved in the negotiations.

"It is herding cats, there's no question about it, and they are not always the most agreeably tempered cats," said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a firm that advises on regulatory policy.

For example, the members of the Treasury team setting up the new Consumer Financial Protection Bureau, along with the Federal Deposit Insurance Corp, have been pushing for a larger financial settlement than the Office of the Comptroller of the Currency, the sources said.

The Federal Reserve appears to be somewhere in the middle and has not backed the OCC's approach, as regulators continue to focus on the size of the penalty for improper foreclosures.

Spokesmen for several of the federal agencies involved in the talks were not immediately available for comment.

U.S. Department of Housing and Urban Development spokeswoman Melanie Roussell and OCC spokesman Bob Garsson declined to comment.

Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, said on Wednesday that the attorneys general were "approaching a very sensitive time of negotiations."

Miller is spearheading the 50-state attorneys general probe into mortgage lenders' foreclosure practices.

"There are a number of federal agencies involved here, and not all agencies have the same ideas of where they should go," Greenwood said, adding that it "may not be accurate" that any universal settlement would apply the same language to all parties, including the attorneys general.

He declined to comment on what specific remedies the attorneys general coalition would seek, or the status of the group's investigation.

One proposal being pushed by negotiators looking for the biggest settlement, such as the incoming consumer agency, would have the attorneys general and federal agencies signing off on what would amount to about a $20 billion settlement, according to a source familiar with the matter.

That number was first reported by The Wall Street Journal on Tuesday.

There is, however, no agreement on that figure among all regulators involved who continue to debate the issue.

Another question regulators are wrestling with is whether and how much of the settlement should go toward helping struggling homeowners.

The homeowners' aid could be either principal forgiveness for qualifying borrowers or loan modifications, the source said. But how to structure the plan so banks would have to follow it is another challenge.

It is unclear how much aid any agreement would provide to consumers, particularly as some lawmakers are seeking to repeal existing aid programs.

On Thursday, U.S. House Republicans said the House Financial Services Committee would vote on a bill on March 3 that would end the Home Affordable Modification Program, the Obama administration's key foreclosure rescue program.

Last fall, the biggest U.S. mortgage lenders -- including Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Ally Financial Inc's GMAC Mortgage -- temporarily halted or refiled paperwork on foreclosures nationwide.

The attorneys general probe into the matter began soon after, and the Securities and Exchange Commission, the Department of Justice and bank regulators have opened their own inquiries.

(Additional reporting by Scot Paltrow, Corbett Daly and Rachelle Younglai in Washington and Dan Levine in San Francisco; editing by John Wallace, Gerald E. McCormick and Matthew Lewis)

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