A new report from Fitch Ratings suggests that the time it takes to liquidate a distressed loan may be on its way to shortening.
As of the first quarter of 2015, the time it took to close a foreclosure was 42 months, Fitch said in an April 21 news release. Between 1999 and 2006, that figure was significantly lower at 15 months.
While Fitch acknowledged that loan liquidation timelines are still on the up, signs point to a plateau in the future. For instance, the rate of increase during the last two quarters was the lowest since 2008.
"The timeline-to-date trends of loans in the pipeline could be a bellwether of a turnaround in liquidation timelines in the medium term," said Sean Nelson, director at Fitch, in the release.
Unfortunately, loss severities will likely remain at their current highs in spite of home price hikes, as the result of the lengthened timelines of late. Once the plateau occurs, however, these should eventually go down.
The findings were part of Fitch's Residential Mortgage Market Index, which reports quarterly on trends in legacy and new-issue RMBS, house price conditions and mortgage market developments.
