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By: Diana Olick
CNBC Real Estate Reporter

The pig in the python is suddenly moving.

Fuse | Getty Images

Thousands of foreclosures that were stuck in process due to delays over the so-called “Robo-signing” paperwork scandal are working their way through a revamped banking system and heading toward final bank repossession.

Foreclosure starts surged 28 percent in January from December, according to a new report from Lender Processing Services. More than 230,000 loans began the foreclosure process in January.

Even more indicative of this new surge in processing is that repeat foreclosures hit an all-time high in January, representing 47 percent of all starts, according to LPS. Repeat foreclosures are either failed loan modifications, or loans that banks were attempting to modify but couldn’t.

“This large amount of foreclosures that have been sitting out there, with borrowers not making payments for an extended period of time, this may be coming to an end,” says LPS’ Herb Blecher. “This is what the market is looking for.”

That’s because while painful to housing in the short term, moving the huge pipeline of delinquent loans to their inevitable end will help the overall market in the long term. There are nearly 4 million loans now in some stage of delinquency which have not even entered the foreclosure process. Banks are modifying loans more aggressively now, but many of these mortgages simply cannot be saved, and the sooner they are processed and new buyers are found for the properties, the sooner overall home prices can recover.

“It’s the resolution of the crisis. It started with a flood of new troubled loans, bottlenecks presented themselves as delinquent loans piled up. “The necessary resolution before we can get back to a healthy market is that that inventory goes away,” says Blecher.

The new surge in foreclosure starts consequently created an equal surge in foreclosure sales, that is bank repossessions or short sales (when the bank allows the property to be sold for less than the value of the mortgage. Foreclosure sales rose 29 percent month to month in January, indicating that there will be a new surge of distressed properties coming to the housing market in the next few months, as banks try to sell these homes.

While the pipeline is moving, there is still a stark contrast between states that require a judge in the foreclosure process and states that do not. Foreclosure sales in non-judicial states outnumbered those in judicial states by three to one, according to LPS. But signs are that even judicial states are ramping up, with foreclosure starts increasing twice as much as they did in non-judicial states in January.

While new mortgage delinquencies are falling, the backlog of distress is large. More than 40 percent of loans in foreclosure are more than two years past due, and judicial states have 63 months of foreclosure inventory to work through. Of course that’s better than last February, when foreclosure inventories hit an all-time high of 147 months.