Though it's been awhile, we previously discussed our survey of state laws regarding various foreclosure-related issues.
In this post we'll wrap up our discussion of the State Law Impacts Project with various graphs depicting our findings.
Our first chart shows the length of time to complete a foreclosure by state, exclusive of applicable redemption periods. The state data presented is based on the most common procedure (judicial or non-judicial) for the state. For judicial foreclosure states, the necessary time required can expand substantially depending on the docket schedule for the jurisdiction. Here we've shown average times and assumed a reasonable "best case" scenario. (If any of our readers have a different sense of that, we'd welcome hearing from you).
Next, we have a chart illustrating the redemption periods for each state, based on the most common procedure for the state. In certain states the borrower's right to redemption can be waived by the loan documents (waivable redemption rights are so noted). In other states like North Carolina, there is an "upset bid" procedure that resembles a redemption process (albeit one of shorter duration). Further, states like Kansas permit the redemption period to be shortened under certain conditions (such as abandonment). The presence of a redemption period can complicate lender strategies, and have a chilling effect on any foreclosing party's willingness to invest in the property prior to the expiration of the redemption period.
The third chart shows the foreclosure period for each state including any non-waivable redemption periods. This chart essentially depicts the outside date for the entirety of the foreclosure procedure, subject to our reasonable best case assumptions, at least.
The following chart shows the so-called SLIP rating for each state, derived as follows. First, we divided the states by their most common procedure, either judicial or non-judicial foreclosures, using only the data from the prevalent foreclosure method procedure. In states such as California where both non-judicial and judicial foreclosure are available, but the former is more prevalent, the SLIP rating is based on the non-judicial foreclosure process.
We determined the ratings through the comparison of each state’s foreclosure period length plus any applicable redemption period. The ratings were then adjusted for several factors including whether a deficiency judgment was available or upset bid process was available. In addition to the numerical value, the ratings include notations for judicial or non-judicial as the most common practice for the state, applicable taxes, and applicable redemption periods.
The SLIP ratings are on a scale from 0 to 100, with 100 indicative of the most expeditious, lender-friendly foreclosure processes. The SLIP rating can also serve as an approximate recovery coefficient for the lender in analyzing the potential value of the foreclosure process. A high SLIP rating is indicative of a relatively straightforward process for the lender which can mitigate loss severities associated with exercising remedies.
Finally, we have provided a categorization of each state by its SLIP rating, which sorts the SLIP information by state so that similar state groupings are evident.
Our hope is that the SLIP data will provide a useful guide for comparing legal remedies' regimes from state to state, and will spawn further investigation into the effects of legal remedies on loss severities. Let us know what you think.