What’s behind NJ’s foreclosure backlog?

From Fortune:

Behind the foreclosure surge in New York, New Jersey

Just as most of us believe we’ve seen the worst of the housing market’s collapse, two unlikely states are only now getting hit with a wave of foreclosures: New York and New Jersey.

The region was largely spared when home prices disastrously tumbled in 2007. New York and New Jersey, with some of the nation’s priciest homes and highest property tax rates, saw nowhere near as many foreclosures during the Great Recession as most of the rest of the country. But that has changed.

Next to Florida, New York and New Jersey have the highest share of homes undergoing foreclosure relative to all homes with mortgages, according to a report by CoreLogic. In February, Florida had the highest share at 9.9%, followed by New Jersey at 7.2%, and New York at 5%.

This might come as a surprise, given that household finances in the two states have generally fared better than the rest of the country in recent years. But while there are fewer mortgages in New York and New Jersey entering foreclosure every month than nationally, more of them have been getting stuck in the process. That’s because the two states use a judicial foreclosure process, which generally requires that foreclosures go through a state court.

Between 2010 and 2012, the share of mortgages entering foreclosure each month was 0.24% in upstate New York, 0.36% in downstate New York and 0.40% in northern New Jersey — all lower than the national average of 0.42%, according to a recent report by the Federal Reserve of New York. This is a good thing, but since foreclosures take longer to process, it also slows down the region’s housing recovery. On average, it takes 503 days to complete a foreclosure in New York and 481 days in New Jersey, markedly higher than 318 days nationwide, according to the Fed.

This says less about the strength of the recovery than the unintended consequences of New York and New Jersey’s foreclosure laws. While the regulations certainly protect homeowners, they also hamper the housing market’s healing process.

From the NY Fed:

Foreclosures Loom Large in the Region

Households in the New York-northern New Jersey region were spared the worst of the housing bust and have generally experienced less financial stress than average over the past several years. However, as the housing market has begun to recover both regionally and nationally, the region is faring far worse than the nation in one important respect—a growing backlog of foreclosures is resulting in a foreclosure rate that is now well above the national average. In this blog post, we describe this outsized increase in the region’s foreclosure rate and explain why it has occurred. We then discuss why the large build-up in foreclosures could cause a headwind for home-price gains in the region.

While the foreclosure rate has been edging down in the nation recently, the opposite is true in New York and northern New Jersey. The chart below shows the foreclosure rate as measured by the share of all active mortgages in foreclosure in a given month. After rising sharply during the housing bust, the U.S. foreclosure rate plateaued at about 4 percent in 2011, and has since fallen. Unlike the national rate, the foreclosure rate in our region has steadily climbed over the past several years. The rate in northern New Jersey and downstate New York now hovers at around 8 percent, double the national average. Even in upstate New York, where housing conditions have remained relatively stable, the foreclosure rate has recently edged above the national rate. Indeed, according to a recent report, New Jersey and New York now have the second- and third-highest foreclosure rates in the United States, behind only Florida.

The relatively large stock of foreclosures in our region may come as a surprise given that the housing bust was far less severe here, and household finances have been generally under less stress than nationally in recent years. As the chart below shows, the share of mortgages entering foreclosure each month in the region during the 2010 to 2012 period was at or below the national average, with the rate especially low in upstate New York. Yet while fewer mortgages are entering foreclosure on a monthly basis than nationally, more of them have been getting stuck there. Indeed, the chart shows that it takes far longer for homes to complete the foreclosure process in New York and New Jersey compared with the national average.

This entry was posted in Economics, Foreclosures, Housing Recovery, New Jersey Real Estate. Bookmark the permalink.

63 Responses to What’s behind NJ’s foreclosure backlog?

  1. Mike says:

    Good Morning New Jersey

  2. grim says:

    Why Wayne is cooler than your town:

    Home in Wayne with Darryl McDaniels of Run-DMC

  3. Juice Box says:

    NY Post sticking with their story about the Saudi. Apparently he was acting strange and was tackled after the explosion by bystanders.

  4. Lost in the awful yesterday: Hindenburg Omen.

    “Remember when the last time a cluster of Hindenburg Omens nearly toppled the market in August 2010 and the only saving grace was Ben Bernanke’s QE2 announcement at Jackson Hole which sent risk soaring? Today, nearly three years later, we got the first instance of the Omen again. Will it be a one-off fluke, or a cluster, which is needed to confirm this dreaded technical formation? Stay tuned in the coming days to find out…

    The last cluster was Aug 2010 (and was only saved by Bernanke), the previous cluster was Oct 2007 and we know what followed.”

    http://www.zerohedge.com/news/2013-04-15/we-have-hindenburg-omen-sighting

  5. Mike says:

    The Star Ledger a tad graphic this morning for the squeamish.

  6. Painhrtz - Doc Daneeka says:

    Puhleez we have Mary J blige in Randolph. You know what Grim nevermind wayne is cooler

  7. grim says:

    Queen Latifah is around all the time too, her mom lives a couple blocks from me

  8. Phoenix says:

    (5) Mike
    Agreed.

  9. grim says:

    I don’t think the new law goes far enough, but its a start, from the Daily Record:

    Chris Christie signs ‘fake farmers’ bill into law

    For the first time since 1964, those seeking to claim a farmland assessment tax break on their property will have to abide by a different set of rules.

    Under a bill signed by Gov. Chris Christie today, the gross sales from land that an owner seeks to declare as farmland doubles from $500 to $1,000. The bill also makes a knowing violation of the farmland assessment law punishable by a fine of up to $5,000.

    The bill, dubbed the “fake farmers” measure because it sought to end the practice of large landowners’ claiming a farmland assessment with a minimal amount of effort or sales, was sponsored by state Sen. Jennifer Beck, R-Monmouth. Beck had used the issue of farmland assessment in her 2007 race against then Sen. Ellen Karcher, who at the time claimed a farmland assessment for the sale of a few Christmas trees on her property.

    The law was prompted, however, by a NJ Press Media investigation into the farmland assessment program, which the paper showed suffered from a lack of oversight and inspection. The 2010 articles also showed there was only a small penalty for violating the law and that local governments were losing out on as much as $82 million in property tax revenue because of the way the law was written.

    The new law tightens up not only the penalties and sales threshold, it also requires that program participants submit evidence to the state Department of Agriculture. Participants would also be subject to review.

  10. Painhrtz - Doc Daneeka says:

    an acre of corn at current prices woudl sell for about 3500 bucks so if you can find someone to care and harvest shoud not be a problem for most. that is also selling two cows a year.

  11. grim says:

    The original $500 requirement was put into place in 1964 and never adjusted for inflation. Adjusting based on CPI would increase the minimum to $3,750, not $1,000.

  12. Phoenix says:

    The fact that such a low amount was chosen in the bill proves CC is protecting a certain group while the rest of us pay. What a limp wristed bill.

  13. grim says:

    Doesn’t even come close to maintaining the spirit of the original bill, let alone reducing abuse.

    Hobby farmers shouldn’t get tax breaks, period. That was never the point of the law.

  14. Comrade Nom Deplume, Bostonian says:
  15. Comrade Nom Deplume, Bostonian says:

    [13] grim,

    Agreed. This is a pittance. In fact, I’d declare $1,001 in taxable farm income every year even if I didn’t sell a thing. At the top marginal tax rate, I’d pay approx $400 to save many thousands ever year. That’s still a deal.

    There should be a formula based on acreage.

  16. nwnj says:

    All of Christie’s self proclaimed fixes are half measured and riddled with loopholes — they’re worthless. The guy is a phony and a hack.

  17. Comrade Nom Deplume, Bostonian says:

    [3] juice,

    The saudi story seems to be collapsing. CNN reports he consented to a search of his house and that turned up nothing.

  18. Phoenix says:

    My wife is out looking at homes with realtor. I get a text from her– come quick to look at this house. Realtor says you must act quick as buyers are buying “sight unseen.”
    Marketing at it’s finest.

  19. grim says:

    There should be a formula based on acreage.

    There is, the minimum revenue increases based on acreage. The $1,000 applies to the first 5 acres.

  20. grim says:

    IMHO, the fact that no international terrorist group has claimed responsibility for this leads me to believe it is domestic.

  21. 30 year realtor says:

    Grim, the Paramus house had over 30 showings the first week on the market. Only received 2 offers. Current seller purchased 4/2/12 for $999,000. New sale price $999,000.

    Just goes to show that appreciation is still limited to the most popular price ranges in the most desired communities.

  22. Juice Box says:

    re # 21 – Not so sure Grim the terrorists like to go after civilians, the domestic variety usually has a beef with the government. In this case we have a secure, very high profile area with the cameras rolling for maximum worldwide exposure to bombs set to detonate 10 seconds apart so the cameras rolling could zoom in after the first blast and the carnage and broadcast it worldwide as another bomb goes off. The jihadist movement live and breath by the videos and social networking.

    Just look at these two wanna be terrorists from NJ, just sentenced to 20+ yrs in jail.

    http://www.nj.com/news/index.ssf/2013/04/judge_sentences_two_would-be_t.html#incart_river_default

  23. Juice Box says:

    re # 19- re: “sight unseen”Condos on the Gold Coast maybe. The burbs not so much.

  24. Comrade Nom Deplume, Bostonian says:

    [23] juice,

    Agreed. There has been a drumbeat in the media to focus this on the extreme right due to the date but I think that your view is closer to the mark. The only “right wing” extremist who did a similar bombing was Rudolph in Atlanta. His other bombing was targeted, as are most other right wing attacks. If it was domestic, the gov has so well infiltrated domestic groups, we’d know already.

    Also, the target is a sporting event and a noncontroversial one at that. I could be wrong but I don’t think that even the IRA bombed this indiscriminately. I agree that this was designed for maximum exposure. With the exception of Rudolph, who used the Olympics, this has the hallmarks of middle eastern terrorism.

  25. Comrade Nom Deplume, Bostonian says:

    [21] grim,

    I don’t discount the possibility of deranged lone wolf who had no particular agenda.

  26. Carlito says:

    The racial composicion of Revere MA does not seem to support foreign authorship

    As of the 2010 United States Census[13], there were 51,755 people residing in the city. The racial makeup of the city was 62% White, 4.9% Black, 5.6% Asian, 0.4% Native American, 0.025% Pacific Islander, 11.7% from other races, and 3.3% were multiracial. Hispanic or Latino persons were 24.4% of the population.

  27. JSMC says:

    #21

    Actually, the fact that NO ONE has claimed responsibility should have everyone concerned. If someone had claimed responsibility, then we would have known that this was the last phase of their plan and they would come forward with whatever message they were trying to convey.

    Since no one has stepped forward yet, that says that their plan isn’t over with yet. Something else could be brewing in the near future. I don’t mean to scare anyone, just an observation. Stay safe if you commute to heavily populated areas.

  28. xolepa says:

    (20) As Ronald Reagan once said, Here we go again. The intent of the original law was not so much to reward farmers or ‘fake’ farmers with tax breaks, it was to prevent sale of farm land to real estate developers. If the owner had lower land carrying costs, i.e. property taxes, he/she would be inclined to keep the land and not see it ruined forever by houses/malls/industrial ratables etc.
    There are rich farm owners and there are very poor farm owners. Most just want to hold onto the land and not see it destroyed. Those of you who live in concrete jungles don’t get it and wish upon us miseries that have already befallen yourselves and neighbors.

  29. Libtard in Union says:

    I prefer not to listen to anything that the media “assumes” in the couple of days following a terrorist incident. I swear, they make up as much krap as is humanly possible to drive viewers to their networks. Fox is honestly the worst, as I put it on last night around 11pm for the shear entertainment of it.

    I recall during 9/11 when standing on the roof of my downtown office, looking at the clear silhouette of a large commercial jet that hit smack center in the first WTC tower, the media was unsure if it was even a large jet vs. a small prop. They were claiming it to be an accident. I was in the minority when I claimed there is no way it was an accident, going simply by the precision of the hit. Of course the media didn’t get it right until the second plane hit. I also recall them claiming there were fires burning around Newark among 13 or so other hijacked planes. I too assumed they were talking about the flaming stacks where the refiners burn off the impurities of crude in Linden. Once again, my common sense prevailed. Unfortunately, the media prefers not to use any. You are better off just waiting for the facts, rather than getting all flustered about the false details which drive ratings and commercial spot prices.

    Though, if I was to hazard a guess, it was probably a home grown incident, simply going by the amateurish timing, placement and construct of the bombs (if the ball bearing rumors prove to be more than a rumor). Though, I’m sure the authorities are focused almost entirely on the Islamic population of the northeast. And if they are not, the media will. After all, who wants it to be Joe Smith, when it can be Caleb Mahmood?

  30. Juice Box says:

    This Saudi student “Person of interest” apparently was here on a visa studying English at Harvard Square in this very small school. More interesting stuff from the internet says he seemed to be a car mechanic at home and perhaps an unemployed one.

    http://www.nese.com/

    Nearly a third of the Saudi men under 30 years old are unemployed and live home with their parents, in a country where only 4.3 million of the locals actually work out of a total population of 28 million. They worry allot there about unrest with the youth there. It makes me wonder what he was doing here learning english as a second language. Quite an expensive undertaking for a car mechanic.

  31. freedy says:

    When will we learn? Never,or perhaps until someone is in Barry’s Bedroom unannounced

  32. The Original NJ ExPat says:

    Phoenix, marketing – About a year ago my wife has our two girls, age 8 & 10, at the Dentist and when I get home from work she says that the Dentist wants to do something to address our younger daughter’s “cross-bite”. I ask her what he wants to do. My wife says, “He wouldn’t tell me. He needs to talk to both of us at the same time.” I told her it was BS, she doesn’t even have a lot of her teeth yet and the ones she has look staight to me. I told her he probably needs to finance a divorce or something so he’s up-selling everyone. About a month ago she takes both kids back to the dentist and says that the Dentist didn’t say anything about the cross-bite on our youngest. I told her he probably already paid for whatever he was raising money for before. When I said that, she said. “You know what? The offices were completely remodeled. The looked really nice.”

    “My wife is out looking at homes with realtor. I get a text from her– come quick to look at this house. Realtor says you must act quick as buyers are buying “sight unseen.”
    Marketing at it’s finest.”</i?

  33. Comrade Nom Deplume, Bostonian says:

    [33] expat,

    By contrast, I brought my oldest to the dentist for a night guard, something they said was premature a few months back. Dentist looks at her and says, look, this isn’t bad, I don’t think it’s needed and she’ll just outgrow it in six months. I pressed him on the silence and need, and he said that he was more than happy to take our money if we insisted, but the cost-benefit wasn’t there.

  34. Comrade Nom Deplume, Bostonian says:

    Silence s/b science.

  35. Libtard in Union says:

    On dentists and upselling.

    Be wary of the claimed needs for braces. In my anecdotal opinion, they are often prescribed for aesthetics and nothing more. I was told I needed braces in a bad way, but my parents held off until I gave up my love for playing sports. I never did and my teeth straightened out pretty well on their own. Are they perfect? No. Are they fine for their purpose? Absolutely. Never had a cavity in my life either.

  36. The Original NJ ExPat says:

    I was listening to WRKO AM this yesterday and this morning (Talk radio, kind of like WABC, right-leaning) because they had the most cohesive and continuous coverage, including lots of listener call-ins, so you heard a lot of different perspectives from people who were actually there. On my way to work this morning I heard a brand new promo, something like WRKO is the place where Boston can come together… I turned the radio off and am now done with them.

    I prefer not to listen to anything that the media “assumes” in the couple of days following a terrorist incident. I swear, they make up as much krap as is humanly possible to drive viewers to their networks. Fox is honestly the worst, as I put it on last night around 11pm for the shear entertainment of it.

  37. Dissident HEHEHE says:

    Was flipping channels last night and Fox had that Bill Hemmer dude in Boston and that O’Riley clown kept calling him “Hemmer” like he was his dog. You could tell that Hemmer dude was getting pissed after several “so tell me Hemmer”s.

    Media coverage of this is a joke other than the interviews of eyewitnesses. I don’t believe much coming from the officials either – no prior threats etc. It’s a major sporting event so I am sure they get threats from wingnuts every year.

  38. freedy says:

    Its all about the ratings. Most of it has become unwatchable.

  39. Juice Box says:

    So black duffel bags with pressure cookers loaded with shrapnel. Whomever did this walked through the crowd and put the duffel bag bombs down 100 yards apart before they blew. Hopefully the will find him on video soon.

  40. BearsFan says:

    agree with grim, I am leaning towards the story being a “domestic” terrorist this time.

  41. Dissident HEHEHE says:

    Given where the bombs were placed you’d think it would have to be a person who had been to the event before and new the security layout. At least you hope that’s the case and the security just wasn’t THAT lousy they let somebody waltz right in there.

  42. Libtard in Union says:

    Damn. And I just BOUGHT a new pressure cooker. Cue the background check requirement for pressure cooker purchase.

  43. grim says:

    Pressure cooker? No way, you can see the yellow flash of the explosion on video. There is no possible way to do that much damage with straight air pressure.

  44. Dissident HEHEHE says:

    I think they are just claiming the ordnance was housed in pressure cookers; not that it was some sort of pneumatic device.

  45. Libtard in Union says:

    Damn, I just bought two new duffel bags.

  46. Brian says:

    44.

    Grim, there’s an attachment on this article with a bulletin from Homeland Security in 2010 describing those types of devices.

    http://hosted.ap.org/dynamic/stories/U/US_BOSTON_MARATHON_EXPLOSIVES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-04-16-12-13-07

    These types of pressure cooker explosives have been used in Afghanistan, India, Nepal and Pakistan, according to a July 2010 joint FBI and Homeland Security intelligence report. One of the three devices used in the May 2010 Times Square attempted bombing was a pressure cooker, the intelligence report said.

  47. grim says:

    Seems like an odd choice of container, maybe I’m just attributing too much to the devices intended use and trying to make some kind of connection. Kids metal lunch box, thermos, carry cooler, toolbox, etc would have been equally as likely. I just don’t understand the connection. Big container with a locking lid? Is that the secret here?

  48. Dissident HEHEHE says:

    I’d think it would implicate it being international rather than domestic. Somebody from that neck of the world bringing their know how here and building them.

  49. Brian says:

    48 –
    The Homeland security report said they are common in many parts of the world. Probably where electricity and other forms of energy are not.

  50. Libtard in Union says:

    Pressure cooker IEDs first became popular in 2006 in India. I’m guessing the pressure cooker adds just enough pressure to aid in the scattering of the shrapnel. Perhaps not having pipe bomb type of pressure is beneficial when you want a wider area of dispersion as opposed to a more concentrated blast. Personally, if it was up to me, I would just empty some Estes rocket engines into….

  51. Libtard in Union says:

    Info for homemade bomb building is what built the internet (besides porn of course and especially child porn swapping). I think the first info I ever found on the internet (Prodigy/Compuserve days) was a bomb building cookbook. Lot’s of child porn snaps available then too, but it didn’t interest me.

  52. Libtard in Union says:

    Info for homemade bomb building is what built the internet (besides p0rn of course and especially child p0rn swapping). I think the first info I ever found on the internet (Prodigy/Compuserve days) was a bomb building cookbook. Lot’s of child p0rn snaps available then too, but it didn’t interest me.

  53. Libtard in Union says:

    Pressure cooker IEDs first became popular in 2006 in India. I’m guessing the pressure cooker adds just enough pressure to aid in the skattering of the shrapnel. Perhaps not having pipe bomb type of pressure is beneficial when you want a wider area of dispersion as opposed to a more concentrated blast. Personally, if it was up to me, I would just empty some Estes rocket engines into….

  54. Dissident HEHEHE says:

    Yeah but as an expert said last night once you build one a certain way and are successful you tend to stick to building them that way as you don’t want to lose any body parts. Could still be domestic; just would seem that if it were domestic they’d have to have practiced making them and testing them which I’d think wouldn’t go unnoticed as easliy in the Northeast.

  55. The Original NJ ExPat says:

    [44] grim – Don’t feel bad, I thought the same thing initially. I’m thinking, “OK, how long do they leave it plugged in for before they put it in their backpack or is there a power source in the backpack?” They’re actually just using the pressure cooker as a “bigger pipe” for a pipe bomb you can fill with explosives, shrapnel, and a cellphone for detonation.

    Pressure cooker? No way, you can see the yellow flash of the explosion on video. There is no possible way to do that much damage with straight air pressure.

  56. DL says:

    Many disconnects re Boston. Self-radicalization is a plausable scenario. A 20-something convinces himself it is his duty to engage in jihad via internet sources and learns how to build a bomb. Intel types call it the lone wolf. Hard to miss that what happened in Boston resembles London and Madrid. Location (finish line) selected to maximize TV coverage and casualties. Right wingers tend to select targets connected to government/law enforcemment. Assuming of course there is a political agenda. Too many known unknowns at this point.

  57. DL says:

    Also, hard to build a bomb, harder to build one that explodes, and even harder to build one that explodes when you want it. There are a lot of Darwin Award candidates who have tried. The one who planted them may have only been the mailman.

  58. Comrade Nom Deplume, Bostonian says:

    [55] DL

    That doesn’t stop the press from trying.

    http://www.cnn.com/2013/04/15/us/patriots-day-boston-bombing/?iref=obinsite

    Glaring problem with this comparison is that Waco wasn’t the result of right wing extremists on a rampage. The government started (and finished) it.

  59. joyce says:

    (57)

    “Obviously, nobody knows anything yet,” Esquire magazine’s Charles Pierce said,

    so why didn’t he end his sentence right then and there?

  60. chicagofinance says:

    It’s operatives of the Republican Party….it is a way to undo the sequester out from under O-man (just kidding … sounds cool though)…..

    DL says:
    April 16, 2013 at 3:13 pm
    Many disconnects re Boston. Self-radicalization is a plausable scenario. A 20-something convinces himself it is his duty to engage in jihad via internet sources and learns how to build a bomb. Intel types call it the lone wolf. Hard to miss that what happened in Boston resembles London and Madrid. Location (finish line) selected to maximize TV coverage and casualties. Right wingers tend to select targets connected to government/law enforcemment. Assuming of course there is a political agenda. Too many known unknowns at this point.

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