Foreclosure rates in New Jersey in the first quarter were up 42 percent but March saw a decline of 12 percent. Daren Blomquist, vice president of RealtyTrac, which tracks foreclosures, told NJ Today Managing Editor Mike Schneider that it’s too early to tell if it’s the beginning of a downward trend in foreclosures or just a one-month decline.
“We had seen 12 straight months of year-over-year increases in foreclosure activity in New Jersey. That ended in February. So January and February had some big increases in foreclosure activity in New Jersey, but then in March the numbers did come down,” Blomquist said. “It’s too early to tell now if that’s the beginning of a downward trend back down in foreclosures in New Jersey or whether it’s more of just a one-month anomaly in the numbers. But really needless to say, I think the long-term trend over the last 12 months has been upward in foreclosure activity for New Jersey.”
A backlog of foreclosures is mainly responsible for the increase, according to Blomquist. He said about 75 percent of the new foreclosures coming through New Jersey are loans that originated between 2003 and 2008.
“These are not new homeowners who have just taken out a loan and have gotten into trouble. These are people who got into trouble during the housing bubble and the worst of the housing crisis that now are just starting the foreclosure process because of some of these delays,” Blomquist said. “Robo signing is kind of the most well known of the reasons for the delays, but the New Jersey courts also put a moratorium on foreclosures temporarily among some of the major lenders back in 2011 that really slowed the process down.”
New Jersey has the longest foreclosure process of any state after New York, Blomquist explained. “It’s close to 1,000 days from the time a foreclosure starts to when a bank actually repossesses it in New Jersey and so that has really slowed the pipeline down, which is why we’re seeing the increases now while many of the other states are seeing decreases,” he said.
Both New Jersey and New York have a judicial foreclosure process, along with about half the states. Blomquist said the other half of the states have a more streamlined, faster non-judicial foreclosure process. “But on top of that kind of baseline higher time to foreclose, because of some of this additional intervention on the part of the courts in New Jersey and New York, we are seeing the timelines accelerate, or the timelines over the past few years have accelerated even more dramatically than they have in other states,” he explained.
The news on foreclosures may be taking a turn, according to Blomquist. He said the March decrease could be a sign of what’s to come. “I think the good news here is because the properties that are being foreclosed on now are older vintage loans, it’s not a sign that the housing market is tanking again,” he said. “The good news is that we do expect this upward trend to be a temporary trend and eventually the banks will catch up with the backlog of delayed foreclosures.”
If foreclosure rates continue to decline over the next two to three months, Blomquist said, “then that will be a sign that probably the banks have been able to catch up with the backlog of foreclosures and so the numbers are going back down again. But with just a one-month decline, we sometimes see that and the numbers jump up the next month.”