Years after the beginning of the financial crisis, New Jersey is still suffering severely from its effects. A recent report by the Mortgage Bankers Association shows 8.4 percent of New Jersey’s mortgage loans are now in foreclosure, the second-highest rate in the nation. Only Florida has a higher percentage of mortgage loans in foreclosure, at 14.3 percent.
The mortgage crisis began in 2008 and resulted in a proliferation of foreclosure filings.
Some states that initially suffered the most have started to recover, suggesting that other factors must be in play in New Jersey.
Causes of the High Foreclosure Rate in New Jersey
Experts have suggested a variety of factors that could be contributing to New Jersey’s high rate of home mortgage foreclosures. Primarily, they point to the court-ordered moratorium on foreclosure filings initiated in 2010, which created a large backlog. Although the moratorium was lifted in August 2011, banks have been slow to initiate the foreclosure filings held in limbo during that period.
In addition, the process to complete a foreclosure in New Jersey is significantly lengthier than in other parts of the country. RealtyTrac, a foreclosure market information service, reported that a foreclosure in New Jersey takes 966 days to complete, while the national average is only 370 days.
To combat the crisis, some state senators have proposed legislation that would allow vacant, foreclosed homes to be converted into affordable housing for low-income residents.
In some instances, homeowners may obtain a loan from a state agency to help continue making their mortgage payments while they search for a new job or attend reemployment classes. Others may benefit from considering bankruptcy as a remedy for unsustainable mortgage payments.
Source: Asbury Park Press, “N.J. Foreclosure Inventory Spikes, 2nd Most in Nation,” Jason Method, May 17, 2012.