2 Chairman’s Corner
A Win-Win for
Office of the Chief Economist Report
FORECLOSURE TIMELINES ACROSS
THE NATION RISE
3 Board Actions
Rule Provides Flexibility
for Credit Unions,
Security for Industry
4 Board Perspective
Pen, Paper, Stamp
and a Little Time
5 Credit Unions
Early Withdrawal of CDs
6 Credit Opportunity
Can We Generate Loans
and If So, Where?
10 NCUA Creates
One-Stop Shop for
for Credit Unions
Home prices are rising, new and existing
home sales are up and mortgage
delinquencies and foreclosures are down.
Despite these improvements, the risks to
credit union balance sheets from real-estate
backed assets persist.
One important risk is the lengthening amount
of time that is required to complete the
foreclosure process or foreclosure timeline.
Over the past five years, the U.S. average
foreclosure timeline has increased from 120
to 414 days, a 345 percent increase.
What Drives Foreclosure Timelines
The foreclosure process varies from state to
state. Generally, the most important driver
of foreclosure timelines is whether a state
uses judicial foreclosures—in which the
court system is used to execute the
foreclosure—or non-judicial foreclosures.
Some states have hybrid systems.
Over the past few years, states with judicial
foreclosure systems have had longer
foreclosure timelines and have experienced
more severe lengthening of foreclosure
timelines than those without a judicial
review system have.
Another key driver has been state initiatives
aimed at slowing the rate of foreclosures and
improving the foreclosure process. Many of
these state initiatives require additional
notifications to homeowners, increased
levels of documentation and, in some cases,
require a mediation process.
Generally, timelines jump immediately after
passage of a state initiative as lenders and
servicers adapt to the new procedures. After
an adjustment period, timelines retreat
somewhat, but remain extended relative to
the pre-initiative length.
As the graph on page 9 shows, timelines have
extended in every state where we can make a
comparison. Some of the outlier states in
terms of longest foreclosure timelines include
New York (1,089 days) and New Jersey (689
days). Importantly, states across the spectrum
CONTINUED ON PAGE 9
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