New Jersey foreclosure rates lower than nation's

New Jersey Foreclosure News

New Jersey Foreclosure News
By RICHARD NEWMAN
STAFF WRITER

   

Mortgage foreclosure and delinquency rates continued to rise in the third quarter, but New Jersey rates remained below those for the nation as a whole, a mortgage bankers group said Thursday.

The Mortgage Bankers Association said in its quarterly delinquency survey that 1.56 percent of the mortgage loans in the state were in foreclosure in the third quarter, up from 0.9 percent in the third quarter of a year ago. The national foreclosure rate reached a record 1.69 percent from 1.05 percent at the end of the third quarter of 2006.

"New Jersey, relatively, is not in bad shape," said E. Robert Levy, head of the mortgage bankers' state chapter. "But we do have a problem." Rising foreclosure and delinquency rates throughout the nation, the result of overly aggressive lending and the bursting of the residential real estate price bubble, are taking a toll on homeowners, mortgage lenders and investors in debt backed by one-to-four-family homes. Many economists fear the situation could drive the economy into a recession, prompting the Bush administration Thursday to announce a plan to try to stem the foreclosure tide by freezing interest rates on adjustable rate loans for five years for certain borrowers.

New Jersey ranked 23rd for the percentage of loans in the foreclosure process, and 28th in delinquencies, the mortgage bankers said. The states with the highest foreclosure rates were Ohio (3.72 percent), Indiana (3.28 percent) and Michigan (3.07 percent). States with the lowest rates were Wyoming (0.55 percent), Oregon (0.57 percent) and Washington (0.58 percent).

The percentage of New Jersey mortgage loans on which payments were delinquent, meaning 30 or more days late but not yet in foreclosure, increased to 4.91 percent from 4.03 percent in the third quarter of 2006. The national delinquency rate was 5.81 percent, up from 4.84 percent a year ago.

The percentage of the various types of high-risk, high-priced subprime loans in foreclosure in New Jersey was 7.26 percent at the end of the third quarter. That was up from 5.61 percent in a year earlier.

The largest increase came from adjustable rate subprime loans, on which monthly payments have been ratcheting higher for many borrowers.

Prime borrowers also are having more trouble making payments, according to the survey.

Foreclosure rates on prime loans in New Jersey -- borrowers with higher credit scores -- increased to 0.72 percent at the end of the third quarter from 0.52 percent.

With home values declining, many prime borrowers are in a similar situation to overstretched subprime borrowers. They have little or no equity in their home and are unable to refinance or pay off the loan by selling the house if they suffer an income reduction and can't make the payments, Levy said.

"If they had a 90 percent loan to value, maybe now it's 115 percent," Levy said.

The mortgage bankers' quarterly delinquency survey looks at more than 45 million loans made by about 120 lenders, including mortgage bankers, commercial banks and thrifts.

E-mail: newman@northjersey.com 

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