September’s foreclosure data showed America has become bipolar over foreclosures, with dramatic decreases in most states but increases nearly as great in judicial states where lenders are speeding up processing of defaults.

Foreclosure activity nationwide fell to the lowest level in five years in but increased in 14 judicial states, including Florida, Illinois, Ohio, New Jersey and New York as lenders begin to move on backlogged defaults after processing standards fully implementing the Attorneys General agreement take effect.

The national decrease in September marked the ninth consecutive quarter with an annual decrease in foreclosure activity and helped drop the third quarter foreclosure numbers to the lowest level since the fourth quarter of 2007. Foreclosure filings for the quarter decreased 7 percent from August and 16 percent from September 2011. Third quarter filings were down 5 percent from the second quarter and 13 percent from the third quarter of 2011, according to RealtyTrac.

In the West, declines were even more dramatic. In California, notices of defaults were down 20.7 percent from the prior month, and down 48.1 percent compared to last year. In Arizona, new foreclosures were down 37.1 percent, in Nevada down 40.1 percent, down 40.0 percent in Oregon and Washington saw new foreclosures fall 31.2 percent from August. Sales are also down with Arizona down 24.3 percent, Nevada down 19.5 percent, Oregon down 0.3 percent, and Washington down 33.5 percent from the prior month, ForeclosureRadar reported today.

Third quarter foreclosure activity increased on a year-over-year basis in New Jersey (130 percent increase), New York (53 percent increase), Indiana (36 percent increase), Pennsylvania (35 percent increase), Connecticut (34 percent increase), Illinois (31 percent increase), Maryland (28 percent increase), South Carolina (16 percent increase), North Carolina (14 percent increase), and Florida (14 percent increase). Among judicial states foreclosure activity in the third quarter decreased on annual basis in Massachusetts (16 percent decrease) and Wisconsin (12 percent decrease).

However, more foreclosures may be in store. “It was recently reported that the nation’s five largest mortgage servicers have implemented all of the 320 servicing standards required under the national mortgage settlement. The continued decline in Foreclosure Starts clearly shows that even though servicers are now apparently in compliance and clear to move forward with foreclosures, they are still in no rush to foreclose on the majority of delinquent borrowers,” said Sean O’Toole, founder & CEO of ForeclosureRadar.

However, processing time actually increased durinmg the quarter to a national average of 382 days to complete the foreclosure process, up from 378 days in the previous quarter and up from 336 days in the third quarter of 2011. It was the highest average number of days to foreclose since the first quarter of 2007.

The average time to complete a foreclosure increased substantially from a year ago in several states where recent legislation and court rulings have extended the foreclosure process. These states included Oregon (up 62 percent to 193 days), Hawaii (up 62 percent to 662 days), Washington (up 62 percent to 248 days) and Nevada (up 42 percent to 520 days).

The average time to foreclose decreased from a year ago in 15 states, including Arkansas (down 49 percent to 199 days), Michigan (down 15 percent to 226 days), Maryland (down 9 percent to 541 days), California (down 8 percent to 335 days), and New Jersey (down 4 percent to 931 days).

New Jersey documented the second longest state foreclosure timeline in the third quarter behind New York, where the average time to complete a foreclosure was 1,072 days for properties foreclosed during the quarter. Florida registered the third highest state foreclosure timeline, 858 days – down slightly from 861 days in the previous quarter – and Illinois registered the fourth highest state foreclosure timeline, 673 days.