The clogged foreclosure pipeline is delaying new foreclosure filings, and Florida-based processing services firm DJSP Enterprises said it’s considering layoffs to deal with the decreased business.

DJSP Enterprises’ main client is The Law Offices of David J. Stern, P.A. (DJSPA). In the DJSP Enterprises second quarter 2010 and mid-year earnings report released this week, the company said a slow down in new foreclosure filings will likely necessitate cost cutting and personnel layoffs. The company said it initially believed file volume would increase in the third quarter, leading to the decision to maintain current staffing levels. However, file volumes continue to be delayed and existing staffing levels are not sustainable indefinitely, the report said.

“While a large portion of our business can only be processed with human capital, we are identifying opportunities where technology and process change can be implemented to create efficiency,” recently-appointed DJSPA President and COO Richard “Rick” Powers said in the financial statement. “We are prepared to create efficiencies and make cuts where appropriate over the next three to six months.”

The disclosure came as DJSP Enterprises reported its adjusted net income for the first half of 2010 decreased to $7.8 million from $15.8 million compared to the first half of 2009.

Total revenue was $56.1 million during 2Q10, down 9.1% from $61.7 million in 2Q09. Total revenue excluding client costs was $28.9 million, down 6.5% from $30.9 million during the same period one year ago.

For the first half of the year, total revenue was up 9.3% to $127.7 million, but excluding client costs, total revenue was down 2.1% to $59.7 million.

The decline in revenue was primarily due to a decrease in foreclosure referrals, title fees, and client reimbursed costs, DJSP said. Title fees decreased due to the decrease in foreclosure volume and the switch made by some clients to use their own title company, the report added.

The decline was partially offset by increases in REO closings and liquidation operations in DJSP’s default servicing division and eviction fee revenue. REO closing revenue increased to $3.5 million from $2.1 million. DJSP Enterprises’ REO liquidation services that it provides to DJSPA contributed $3.2 million in revenue in the 2Q10, compared to $2.9 million in the same quarter last year.

Write to Austin Kilgore.

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