All it takes is a drive through almost any neighborhood in New Jersey to see just how bad the state’s housing crisis has become. On nearly every block, you can see houses that are up for sale or have simply fallen into disrepair as a result of their owners’ financial struggles.
Now, the numbers are proving what neighbors have long known – New Jersey has one of the worst housing default rates in the entire country. In fact, the state’s serious delinquency rate recently exceeded Nevada’s – a state once seen as the epicenter of the foreclosure crisis. As of the second quarter of 2012, Florida is the only state faring worse than New Jersey.
A lot of the trouble lies with New Jersey’s judicial review process for foreclosure. The program is designed to hold off housing seizures in an attempt to give debtors more time in their homes. In an ideal world, debtors could use this time to reach a deal with their lender.
However, the judicial review process has had the unfortunate consequence of driving down housing prices. Houses sit in limbo for so long that the lenders just want to get rid of them when they finally take possession. This depresses prices in the rest of the market, pushing borrowers underwater and making it extremely difficult for on-the-edge homeowners to sell their properties at a price that would allow them to pay off their loans without pursuing a short sale.
Despite this troubling news, it is important for struggling New Jersey homeowners to understand they do have options. Many may be able to keep their homes, or at least discharge their debts without going into foreclosure. A New Jersey bankruptcy attorney can help homeowners understand their options.
Source: Bloomberg Businessweek, “New Jersey Housing Suffers as Defaults Exceed Nevada,” John Gittelsohn and Prashant Gopal, Sept. 18, 2012.
To learn more about options for struggling New Jersey homeowners, please visit our bankruptcy & real estate page.