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Study: Hudson City ranks No. 8 in US for loans in foreclosure

* The bank has $977 million of home loans in foreclosure, eighth-highest in the country

Paramus-based Hudson City Savings Bank, once hailed for a conservative lending style that helped it avoid the subprime mortgage meltdown, has $977 million of home loans in foreclosure, the eighth-highest amount in the country, according to a new study by SNL Financial, as the region’s economy still struggles to gain its footing.

Among banks with less than $50 billion in assets, Hudson City ranks behind only OneWest Bank of Pasadena, Calif., which in 2009 acquired loans and other assets of IndyMac Federal Bank, a failed lender that specialized in alternative and subprime mortgages.

JPMorgan Chase, the biggest U.S. bank, had the highest amount of loans in foreclosure as of June 30 at $19.83 billion, followed by Wells Fargo ($17.56 billion) and Bank of America ($15.4 billion). Pittsburgh-based PNC Bank, which has a regional administrative office in Woodland Park, ranked sixth with $2.13 billion in one- to four-family mortgage loans in some stage of foreclosure.

The portfolio of soured loans at Hudson City, the largest New Jersey-based bank, reflects the state’s 8.6 percent unemployment rate, the lender’s heavy reliance on the still-shaky health of the region’s housing market, as well as New York and New Jersey’s slow foreclosure process, according to industry observers.

“Mortgage lending is the focus of their business, and when you are that concentrated, and the economy goes through what it went through, you end up being exposed,” said Parsippany-based bank consultant Robert E. Kafafian.

The state’s slow foreclosure process, while giving New Jersey families more time to adapt to financial setbacks, also lengthened the time it takes for banks to clear bad loans from their books.

“The foreclosure process and the time to complete a foreclosure, while improving, continue to be prolonged, especially in New York and New Jersey, where 69 percent of our non-performing loans are located,” Hudson City said in its second-quarter earnings statement in July. The lender said in a recent regulatory filing that it was taking 30 to 36 months to get repaid or to foreclose on defaulted loans.

The average foreclosure time in the United States last year was 382 days, said Kafafian. In New York and New Jersey, where foreclosures are processed through the courts, it took 1,072 and 931 days, respectively, he said. That’s nearly three years in New York and more than 2 1/2 years in New Jersey.

“These delays have impacted our level of non-performing loans as these loans take longer to migrate to real estate owned and ultimate disposition,” the bank said in a regulatory filing.

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