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Foreclosures Spiking in Some States, After Years of Judicial Delays

NEW YORK (TheStreet) -- Home foreclosures in the United States were down year-over-year for the 40th straight month in January, according to RealtyTrac, but foreclosures are peaking in states that have judicial foreclosure processes.

According to RealtyTrac's Foreclosure Report, there were a total of 124,419 foreclosure filings during January, rising 8% from December, but declining 18% from January 2013. The increase from December was typical, because of the usual holiday lull.

The year-over-year declines during January were the smallest since September 2012, since 15 states showed large year-over-year increases in foreclosure filings, because of the long delays caused by judicial foreclosure processes, including New York, New Jersey, Massachusetts, Pennsylvania and Maryland.

Florida had the most foreclosure filings, with 25,996 in January, which was down 13% from a year earlier. Next was California, with 14,834 filings, down 18% from January 2013. Illinois ranked third, with 8,781 foreclosure filings during January, declining 38% from January 2013.

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Florida also ranked highest by foreclosure rate, with one out of every 346 housing units having a foreclosure filing. Next was Nevada, with one out of every 533 housing units having a filing, followed by Maryland, with one out of every 543 housing units being in some stage of the foreclosure process.

Maryland's "overall foreclosure activity increased on a year-over-year basis for the 19th consecutive month in January," RealtyTrac said.

For metropolitan statistical areas with populations of over 200,000, eight of the top 10 for foreclosure filing rates were in Florida, with Port St. Lucie leading, as with one out of every 211 housing units in that MSA at some stage of the foreclosure process.

"The monthly increase in January foreclosure activity was somewhat expected after a holiday lull, but the sharp annual increases in some states shows that many states are not completely out of the woods when it comes to cleaning up the wreckage of the housing bust," said RealtyTrac vice president Daren Blomquist in the company's press release.

"The foreclosure rebound pattern is not only showing up in judicial states like New Jersey, where foreclosure activity reached a 40-month high in January, but also some non-judicial states like California, where foreclosure starts jumped 57 percent from a year ago, following 17 consecutive months of annual decreases," Blomquist added.

More than five years from the peak of the housing crisis, a spike in long-delayed foreclosure processes while the overall housing market continues to strengthen can only be a good thing. Resolving foreclosures clears out excess housing inventory, which can only further strengthen the U.S. housing market.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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