In New York, it takes an average of about three years for a bank to foreclose on a house.
In Texas, it takes about three months.
That's a huge, huge difference, and it's largely by design. About half the states in the country, including New York, require foreclosures to go through the courts. This slows down the process, and is intended to reduce the risk of someone being wrongly foreclosed on. In the other half of the country, including Texas, a third-party trustee can foreclose without going through the courts.
The latest foreclosure numbers show a vastly different picture in judicial and non-judicial foreclosure states. Non-judicial states, including California and Arizona, raced through foreclosures in the first part of the housing bust and are now seeing foreclosures decline. Judicial states, including Florida, have had a slower process and are still seeing foreclosures rise.
As we've noted before, foreclosed houses tend to sell for significantly less than similar houses that haven't been foreclosed on. And the massive wave of foreclosures that followed the housing bust has been a drag on home prices for years now.
Overall, foreclosures in non-judicial states fell by 29 percent between July and September of this year, compared with the same period last year, according to RealtyTrac, a private company that focuses on foreclosures. Foreclosures in judicial states rose by 14 percent.
This isn't true for every state — some non-judicial foreclosure states are seeing rising foreclosure rates, and vice versa. But according to Darren Blomquist, a VP at RealtyTrac, the tradeoff is clear. "A longer foreclosure process is prolonging the pain and the path to recovery for distressed properties," he says.