NJ Leads Nation in Distressed Mortgages
by Patrick J. O'Keefe, Director of Economic Research
New Jersey’s share of distressed mortgages is the highest in the nation, according to the national delinquency survey of the Mortgage Bankers Association (MBA).
The state’s share of distressed mortgages – that is the combination of all loans that were in foreclosure or approaching it (i.e., 90-or-more days in arrears) – was 11.6%, the highest in the nation in the second quarter of 2014.
Nationally, 4.8% of all mortgages were either in foreclosure or more than three months delinquent.
New Jersey’s delinquency statistics improved marginally in the most recent quarter [see chart], but its gains were weaker than all but four other states.
The State’s foreclosure inventory was equivalent to 8.1% of its outstanding mortgages. That is down from the first quarter of 2013, when mortgages in the foreclosure process comprised 9.0% of the total.
Nationally, 2.5% were in foreclosure during the most recent quarter, down from the peak of 4.6% at the end of 2010.
The rate at which new foreclosures were instigated in New Jersey during the second quarter (0.9% of all loans) was unchanged from a year ago but one-third lower than the comparable period of 2009, during the housing melt-down.
However, the rate at which foreclosures were started in New Jersey during the second quarter was more than double the national average (0.4%).
A key reason for the lagged decline in the State’s backlog of distressed mortgages is that New Jersey, as a judicial foreclosure state, utilizes more rigorous – and, therefore, more time consuming – foreclosure procedures.
According to the MBA, judicial foreclosure states “have foreclosure inventory rates two to three times the national average.” Of the 18 states with a foreclosure inventory rate in excess of the national average, 15 rely on judicial proceedings.
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.