The Real Deal New York

New Jersey only state to see foreclosures rise in first quarter

Of all Garden State home loans, 8 percent in foreclosure process

May 15, 2014 02:10PM
By Business Insider

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NJ-foreclosureNew Jersey was the only state to see an increase in loans in foreclosure on a quarter-over-quarter basis in the first quarter. This is according to a new report from the Mortgage Bankers Association.

New Jersey has fast become a focal point of the U.S. foreclosure crisis. Eight percent of New Jersey’s loans are in the foreclosure process, the highest in the country. And there was no silver lining in the decline in loans that were over 90 days delinquent either — because this was driven by loans that entered the foreclosure process. We previously talked about New Jersey taking over the top spot for the state with the most delinquent mortgages in the U.S. This is in part because New Jersey is a judicial state — one that requires court action on a foreclosed home — which inevitably creates a backlog of foreclosures.

The process takes about nine months in the garden state.

Slower home price growth, as we’ve seen in New Jersey, also tends to keep more homeowners in negative equity — when they owe more on their homes that their mortgage is worth.

New Jersey is bucking the national trend.

The percentage of national loans in foreclosure in the first quarter was 2.65%. This was down 90 basis points from a year ago and 21 bps from the previous quarter. This was the lowest foreclosure inventory rate seen since Q1 2008.

Meanwhile, U.S. mortgage delinquency rate was 6.11% of all outstanding loans in the first quarter, the lowest level since Q4 2007. This was down 28 bps from the previous quarter, and down 114 bps from a year ago.

Here are some other details from the report:

At the metro area level, Miami and Tampa have the highest percent of loans in foreclosure (foreclosure inventory).

Only the Baltimore metro area had a first quarter year-over-year increase in new foreclosures started.

Miami, Atlanta, and Tampa saw the biggest decreases in foreclosure starts.

The national serious delinquency rate — the percentage of loans that are over 90 days past their due — were up 5.04% in Q1. This was down 37 basis points from Q4 2013, and down 135 bps from a  year ago.

75% of seriously delinquent loans were issued in 2007 and before. 20% were originated between 2008 and 2010.

“A more stable and stronger job market, coupled with strong credit standards on new loans, has kept delinquency rates on recent vintages low, while the portfolio of loans made pre-crisis is steadily being resolved,” said Mike Fratantoni, MBA’s chief economist in a press release.

The rise in home prices have helped push many underwater homeowners into positive equity.

Even as the most recent housing indicators point to a slowdown in the housing market the national trend appears to be encouraging.

This chart from Calculated Risk shows the percent of loans that are delinquent:

(Source: Calculated Risk)

(Source: Calculated Risk)

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