The percentage of New Jersey homes in foreclosure rose during the first quarter, sending the state past Florida with the highest share of mortgages in foreclosure in the nation. According to the Mortgage Bankers Association, 8.12% of all mortgaged homes in New Jersey were in the process of foreclosure during the first three months of the year. While that was down from about 9% a year earlier, New Jersey was the only state to see an increase from the previous three months, the report said.
The share in Florida, which had the highest percentage since the housing crash in 2008, dropped from 11.4 to 7.62% during the first quarter. New Jersey passed Nevada in the second quarter of 2012 in the rate of homeowners with seriously delinquent loans. New Jersey and Florida are among 26 states that require the foreclosure process to go through the court system, which slows down the process but protects homeowners.
Foreclosure filings in New Jersey slowed to a trickle in 2010 when the state Supreme Court required the six largest banks to review their lending procedures. The number of filings fell from 58,000 in 2010 to 6,000 by July 2011 and created a backlog the courts are still trying to unclog. Mark Fleming, chief economist for CoreLogic, predicted in January the Garden State would soon top the list. “New Jersey may top the list within the next six months,” Fleming told The Star-Ledger then.
According to the MBA report, New Jersey also had the highest percentage of new foreclosures started in the first quarter of 2014. But the survey also found that the number of distressed loans that were at least 90 days delinquent had dropped, indicating a possible breakthrough in the logjam of backlogged past-due loans.
According to an April report by real estate consultant firm Otteau Valuation, the
state “continues to work through its backlog, which has caused filings to increase by 81%” in the first quarter compared to the same period last year. “Looking ahead, the mortgage delinquency rate will decline as more foreclosures are completed,” the Otteau report said.