Mortgage servicing firm Lender Processing Services released its January Mortgage Monitor report March 7 and revealed that foreclosure inventory in judicial states was three times higher than in non-judicial states.

However, Herb Blecher, applied analytics senior vice president for LPS, said that the familiar judicial/non-judicial dichotomy no longer is as clearly defined as it once was.

“On average, pipeline ratios — the rate at which states are currently working through their existing backlog of loans either in foreclosure or serious delinquency — are almost twice as high in judicial states than non-judicial states,” Blecher said in a news release. “At today’s rate of foreclosure sales, it will take 62 months to clear the inventory in judicial states as compared to 32 months in non-judicial states. A few judicial states — New York and New Jersey in particular — have such extreme backlogs that their problem-loan pipelines would take decades to clear if nothing were to change.”

Blecher said that some non-judicial states, such as Massachusetts and Nevada, recently have enacted ‘judicial-like’ legislative or legal actions that have greatly extended their pipeline ratios. The time to clear real estate-owned property in Nevada has increased from 27 months in January 2012 to 57 months in January 2013. In Massachusetts, the time to clear has ballooned from 75 months to 171 months. In California, the time to clear is expected to increase because the state recently enacted a Homeowner’s Bill of Rights that’s closely modeled on the Nevada legislation.

Additionally — and further underscoring the differences between judicial and non-judicial states — new problem loan rates in non-judicial states declined slightly over the last six months, while increasing almost 20 percent in judicial states.

The LPS data also showed that, despite an overall national trend of improvement, new problem loan rates remained high in states with large numbers of underwater borrowers.

Negative equity was high in Nevada (45 percent of borrowers were underwater), Florida (36 percent of borrowers were underwater) and Arizona (24 percent of borrowers were underwater). Each of these states also experienced higher-than-average levels of new problem loans.

States with the highest percentage of non-current loans, which combine foreclosures and delinquencies as a percentage of active loans, were Florida, Mississippi, Nevada, New Jersey and New York.

States with the lowest percentage of non-current loans were Alaska, Montana, North Dakota, South Dakota and Wyoming.

Read the January 2013 Mortgage Monitor report.