An enormous backlog of foreclosures dominates the foreclosure picture at every level, outpacing the monthly sales volume by a factor of thirty and promising to continue the Foreclosure Era for months and years to come.

Ultimately, these foreclosures will most likely reenter the market as REO properties, putting even more downward pressure on U.S. home values.

The February Mortgage Monitor report by Lender Processing Services, Inc. shows that in spite of the backlog, delinquencies continue to decline and banks’ modification efforts have begun to pay off, as 22 percent of loans that were 90+ days delinquent 12 months ago are now current.

Option ARM foreclosures increased 23 percent increase over the last six months, far more than any other product type. In terms of absolute numbers, Option ARM foreclosures stand at 18.8 percent, a higher level than Subprime foreclosures ever reached. In addition, deterioration continues in the Non-Agency Prime segment. Both Jumbo and Conforming Non-Agency Prime loans showed increases in foreclosures and were the only product areas with increases in delinquencies.

Slower processing times are causing timelines continue to extend, with the average U.S. loan in foreclosure now having been delinquent for a record 537 days, and a full 30 percent of loans in foreclosure have not made a payment in over two years.

The total U.S. loan delinquency rate is now 8.8 percent, down from 10.78 percent a year ago. Foreclosure starts are also down 14 percent from February 2010 and seriously delinquent loans are down 9.43 to 8.24 percent. However, the foreclosure rate is up 7.5 percent. The total U.S. non-current inventory stands at 6,856,000

States with the most non-current loans are Florida, Nevada, Mississippi, New Jersey, Georgia States with fewest non-current loans: Montana, Wyoming, Alaska, South Dakota, North Dakota. Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.