An analyst from Lender Processing Services, a default services analytics group, is predicting that foreclosure and REO issues could continue to plague the housing market recovery until late 2013.

During the LPS annual conference in Denver last week, LPS Applied Analytics managing director Kyle Lundstedt said that well-intended programs designed to keep borrowers in their homes were having unintended consequences, and that those in the default industry need to be prepared for troubled loan inventory to continue to rise.

“If current trends persist, it will take about 12 months before foreclosure proceedings are initiated,” once borrowers become delinquent, Lundstedt said in an REO Insider report. “It takes a heck of a long time to get into foreclosure at this point. When you are in foreclosure, it doesn’t get much better. Today, if you entered foreclosure, it would be 16 months before you got out. How many people think that is a good thing? It’s tragic.”

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