In spite of the improving housing recovery market and the recent declining figures of foreclosures across the nation, foreclosures in New Jersey remain among the country’s highest rate, second only to Florida. There are several reasons for this. Commentators point at the state’s legal process for foreclosures that helps create a logjam. New Jersey’s foreclosure process averages over 900 days, near 10 times as long as the time period in Texas.
Foreclosures in 2012
Bank foreclosures declined 17 percent over the year nationwide according to CoreLogic. Foreclosures in NJ went up one percent to a total 7.7 percent of mortgaged homes compared to 3.2 percent, one million homes, nationwide. RealtyTrac predicts that over 650,000 homes will be repossessed this year compared to 800,000 last year.
The state received $75 million for foreclosure relief from the $25 billion settlement the federal government had reached with major bank lenders for faulty practices. But instead of helping underwater homeowners, most of that money was used to help the state resolved its budgetary problems.
Unemployment in the Garden State
Unemployment in New Jersey has remained high, increasing to 9.9 percent in August while falling to 9.7 percent by October. The state’s unemployment rate is the nation’s fourth highest, compared to a 7.8 percent average across the country. The job situation must improve so that residents may have the necessary capital to avoid foreclosures in NJ and to work out loan modifications with financial institutions.
A Push for Construction and Affordable Housing
Whereas housing construction across the nation has shown major gains throughout the year, indicating a clear recovery mode in the industry, New Jersey has lagged behind, compounded by the destruction caused by Hurricane Sandy. CoreLogic noted that home prices rose nationally 4.6 percent year-to-year August, but they fell in New Jersey 1.4 percent. Instead of building a market adding to new home construction, the state must face a period of reconstruction on homes and infrastructure. Hurricane Sandy unleashed a $22.6 billion destruction path over an estimated 75,300 homes. Total recovery may exceed $50 billion.
The state has recently passed an affordable housing bill designating a $268 million trust fund to allow low- and middle-income families to purchase foreclosed properties that had been abandoned. As of December, Gov. Chris Christie has not signed the bill. He did sign a bill that could expedite the foreclosure process. However, the high-end market of $400,000-$500,000 properties makes up a significant amount of the state’s foreclosure properties. New Jersey reflects a large inventory of these properties and is in a similar situation as Maryland, Connecticut and New York.
Although low- and middle-class families are not yet receiving direct help, the damage caused by Hurricane Sandy should result in a slowdown of new foreclosures in NJ. There should be more opportunities for distressed homeowners to negotiate new loan modifications.
- License: Royalty Free or iStock source: http://office.microsoft.com/en-us/images/results.aspx?qu=home&ex=1#ai:MP900442362|
John Shelton is a former real estate agent with a background in home foreclosures.