Tri-state area sees spike in foreclosures

Even before Hurricane Sandy wreaked havoc in New York, New Jersey and Connecticut, the states were faced with dramatic increases in foreclosures, Bloomberg News reported today.

October default, auction and repossession notices increased 123 percent in New York, 140 percent in New Jersey and 41 percent in Connecticut from a year earlier, according to a RealtyTrac Inc. report cited in the story. Those were the biggest annual gains nationwide.

According to the report, foreclosed properties in storm-ravaged counties in these states were valued at $41 billion. Fannie Mae and Freddie Mac said last week that they would set a 90-day suspension on evictions and foreclosure sales in affected areas. Bloomberg News reported that the agencies would also suspend credit reporting for homeowners who are granted relief, and allow loan-servicing firms to extend forbearance plans for up to 12 months.

Still, Sandy is expected to greatly exacerbate delinquency rates because of increased job losses, said Phyllis Salowe-Kaye, the executive director of a Newark-based homeowner counseling agency. “There are whole towns where businesses have been wiped out, and people worked in those businesses,” Salowe-Kaye said. [Bloomberg] — Hiten Samtani