N.J. feels the pinch, but not the pain
Foreclosure filings are up; delinquencies are down
Friday, October 12, 2007
BY SAM ALI
Star-Ledger Staff
First, the good news.
Last month, 39 states saw a drop in foreclosure filings compared to
August, RealtyTrac, a California company that monitors foreclosure
activity, reported yesterday.
PAGE 26 The bad news: New Jersey was not one of them.
Foreclosure filings in the state jumped 16 percent from August to
September, RealtyTrac reported, as financially strapped homeown ers
already behind on mortgage payments defaulted on their loans or came
closer to losing their homes to foreclosure.
The total number of filings in New Jersey last month was 5,162,
according to RealtyTrac. The actual number of homes caught up in the
foreclosure process is less than that, however, since a single
property can generate several filings. Foreclosure filings include
mortgage default notices, auction sale notices and bank reposses sion
notices.
The number of homes in the state actually lost to foreclosure in
September was 300, RealtyTrac found, double the amount back in May.
As sharp as that increase is, however, there appears to be a bright
light at the end of the tun nel.
The rate of mortgage delinquencies -- the number of bor rowers late on
their payments by 30, 60 or 90 days or more -- is lower in New Jersey
than the rest of the nation, and slowed during the second and third
quarters of 2007 here more than in the rest of the country, said Sean
Maher, an economist who follows New Jersey at Moody's Economy.com, a
research firm based in West Chester, Pa.
"Delinquencies have leveled off pretty noticeably" in New Jersey, he
said, "whereas in the U.S., it is still growing."
The volume of delinquencies often foreshadows the trend in foreclosure
activity.
One other thing that bodes well for New Jersey's housing market: The
percentage of loans that are 30 days past due is much higher than the
percentage that are 60 or 90 days past due, he said.
"That's a good sign, because it means people are having a little bit
of trouble paying their mort gages, but they are not falling into this
persistent pattern which would make them more likely to wind up in
foreclosure," Maher said.
In the second quarter of this year, 1.78 percent of the state's
mortgage loans were delinquent by 30 days or more, while only 0.65
percent of loans were 60 days past due and 0.26 percent were 90 days
past due, he said.
The U.S. housing market has seen sales decline and home prices flatten
or fall, making it harder for homeowners who can't afford to make
mortgage payments to sell their homes or ob tain refinancing.
To make matters worse, during the housing boom, many homeowners took
on adjustable-rate mortgages that are now adjusting to much higher
interest rates, re sulting in payments they can no longer afford.
The sharp rise in mortgage delinquencies and foreclosures this year
has led the mortgage indus try to tighten lending standards, further
narrowing options for homeowners struggling to pay their mortgage.
But there are a couple of reasons why the housing market in New Jersey
appears to be on firmer ground, Maher said.
"New Jersey households have a pretty substantial cushion of wealth,
which is protecting them during this period, and a lower share of
'subprime' mortgages, which is the main catalyst for the deterioration
in the housing market," he said.
Maher also noted while homeowners here extracted cash from their homes
during the housing boom to finance their spending sprees, apparently
they didn't drain as much equity compared with the rest of the country.
Average equity per New Jersey household -- or total accumulated and
available wealth -- is $149,302. Nationally, the figure is $91,238,
Maher said.
"New Jersey residents have taken advantage of mortgage-equity
withdrawal, but they have not completely sapped their equity," he said.
And that means there is more incentive for them as homeowners to try
and hold onto their homes.
"Basically, when a household has very little accumulated value in
their homes, they are more likely to let that asset slide," he said.
"If you have very little value built up in your home, you are more
likely to fall behind on your payments and let it get repos sessed."
Nationally, foreclosure filings declined 8 percent from August to
September, RealtyTrac reported yesterday. Still, last month's figure
was nearly double what it was a year earlier, and represents the
second-highest total for filings in a single month since the company
began tracking monthly filings two years ago.
Across the country, 223,538 foreclosure filings were reported in
September, up from 112,210 in September 2006, RealtyTrac found.
Rick Sharga, RealtyTrac's vice president for marketing, said the
sequential decline from August to September was probably just a blip,
not a bellwether of declining foreclosure activity. In August, he
noted, there was a spike in the number of bank repossessions that did
not occur in September.
"We don't see September as the beginning of the end in this cycle of
foreclosures," Sharga said. "August was an extraordi narily high month
for foreclosure activity, so some fall-off was al most predictable."
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