In addition to banks’ tight mortgage lending standards that were criticized by Federal Reserve Chairman Ben Bernanke two weeks ago, Fitch also said continued recovery in residential real estate prices will require regional improvements.

Meaningful improvement is likely to be hampered by slow foreclosure processing in judicial. The judicial process governing liquidations in states, including New Jersey and New York, may add more than six months to the timeline. While home prices in those states fell less than in many others during the downturn, both have seen prices erode in the past year.

Meaningful improvement in housing is also being hindered by regional unemployment rates said the Fitch ratings service in an article that originally appeared as a post on the Fitch Wire credit market commentary page.

On Nov. 20, the Bureau of Labor and Statistics released unemployment data showing the Pacific region continued to report the highest jobless rate at 9.5 percent, while the lowest was the West North Central at 5.6 percent. Just two of the regions reported statistically significant unemployment rate changes. The rate in the South fell by 0.2 percent and the West by 0.1 percent.

The service said that at the national level, tight residential lending practices must be loosened before a meaningful recovery can take root. While tight underwriting practices were appropriate after the collapse in the subprime mortgage market, at a speech last week, Federal Reserve Chairman Ben Bernanke said “it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.”