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NJ Tops Nation in Distressed Mortgages - Again


by Patrick J. O'Keefe, Director of Economic Research

View accompanying chartbook.

One of every nine mortgages (11.0%) in New Jersey was either in foreclosure or at least 90 days in arrears at the end of 2014. Nationally, the distressed mortgage rate at 2014’s end was 4.5%.

The State’s distressed mortgage rate was highest among all states for the fifth consecutive quarter according to data compiled by the national Mortgage Bankers Association (MBA).

Year-on-year, New Jersey’s distressed mortgage rate fell 7.4%, which tied Massachusetts for 48th (i.e., third smallest) among all states; only West Virginia had a smaller improvement. The national rate was 16.5% lower than at the end of 2013.

The State’s distressed mortgage rate was one-sixth (16.9%) lower than in the first quarter of 2013 when it peaked at 13.2%. Over the same period, the national rate declined 29.3%.

Nationally, the distressed mortgage peak was earlier (2009) and lower (9.7%) than New Jersey’s. From its cyclic peak, the national rate has declined by 53.3%.

The number of mortgages has been declining both nationally and in New Jersey since both reached an all-time high in the fourth quarter of 2007. Subsequently, they each fell in 21 of the 28 quarters. Nationally, the drop totaled 11.0%; New Jersey’s was 7.3%.

New Jersey’s relatively slow pace in reducing its distressed mortgage inventory reflects, in part, its status as a “judicial foreclosure” state. That entails procedures that are more rigorous – and, therefore, more time consuming – than those of nonjudicial jurisdictions.  The MBA notes that foreclosure inventory rates are “roughly three times” higher in states the require judicial proceedings.

The rate at which foreclosures were instigated in New Jersey (0.8% of all mortgages) rose marginally in the most recent quarter but was otherwise the lowest since 2012.

The statements, opinions, and conclusions contained herein are based solely upon the author’s own studies, research, and personal experience. Neither CohnReznick nor the author make any representation or warranty as to the accuracy or completeness of this information. CohnReznick and the author expressly disclaim any liability for any loss or damage which may be incurred, of any kind whatsoever, as a result of or arising from the use of any of the information contained herein or reliance on the accuracy or completeness of it.

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