From the Record:
Foreclosures spur bearish forecasts
The nation’s home-foreclosure rate of 1.69 percent at the end of the third quarter was an all-time high, but New Jersey’s rate, at 1.56 percent, has been worse, the Mortgage Bankers Association said last week.
The record high for New Jersey was 2.44 percent, posted in the fourth quarter of 1992 at the tail end of a recession.
“The last time we had a housing slump as steep as the current one was in the late 1980s, and that was part of a national recession,” said Joseph Seneca, a professor at Rutgers University’s Edward J. Bloustein School of Planning & Public Policy. “We don’t know if this is the bottom.”
The state and national foreclosure numbers do not bode well for the economy, or for community banks and thrifts in New Jersey, said David Danielson, president of Danielson Associates, a community bank consultant in Rockville, Md.
With a general tightening of credit, “the ability to make and sell mortgages is not going to be any better in 2008,” he said.
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Home prices are “still significantly overvalued,” Abbott wrote, adding that further home-price depreciation is expected and that it will hurt consumer spending and put more stress on businesses.
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Robert Vliet a senior vice president at thinly traded Atlantic Stewardship Bank in Midland Park, said that commercial bank has also benefited from less competition from mortgage brokers.“We definitely have seen a little bit of an increase [in lending business],” he said. But declining real estate values are “a little bit worrisome,” he said.
Distressed borrowers are more likely to stop paying and walk away from a home if their equity disappears.