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NJ mortgage default rate third-highest in U.S.

Photo Credit: Cliffview Pilot

New Jersey is third in the nation in the number of loans either in foreclosure or on the brink, with more than one of every 10 either already in foreclosure or “seriously delinquent,” according to a report issued by the Mortgage Bankers Association.

The numbers are much better in other states, but New Jersey, Florida and a few others are dragging the overall rate down, the study found.

Florida is first, with 18.68 percent of mortgages at least 90 days behind, followed by Nevada, with 14.34 percent, and New Jersey, at 11.36 percent, the Mortgage Bankers Association reports in its National Delinquency Survey.

Nearly 8 percent of all prime mortgage holders in New Jersey are at least one payment late, the study found. The number is steep for subprime loans in New Jersey – 40 percent — that are three or more months past due or in foreclosure.

Overall, the second quarter of 2011 found 8.44 percent of homeowners nationwide missed at least one mortgage payment in the April-June quarter. Adjusted for seasonal factors, the number is up 0.12 percentage point from the January-March period.

By way of comparison: The percentage of delinquent borrowers in an ordinary market is about 1.1 percent, the MBA said.

The good news for the United States is that seriously delinquent loans declined overall for the fourth consecutive quarter to the lowest level since 2009. The bad news for New Jersey is that its rate, and those of a few other states, are so high that the overall numbers nationwide are skewed.

The figures are also affected by when the loans were taken: Those between 2005 and 2007 accounted for 30 percent of all mortgages but 65 percent of the seriously delinquent loans – thanks, of course, to the housing bubble.

At the same time, New Jersey is one of several states suffering from backlogged foreclosure filings that would have drastically driven up the number, the association cautioned.

“While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped.  Mortgage delinquencies are no longer improving and are now showing some signs of worsening,” said Jay Brinkmann, MBA’s Chief Economist. “The good news is the continued decline in long-term delinquencies, those mortgages that are three payments or more past due.

“The bad news is that drop is offset by an increase in newly delinquent loans one payment past due.”

He blamed the loss of jobs: “Weekly first-time claims for unemployment insurance started the quarter at 385,000 but finished the quarter at 432,000. The unemployment rate started the quarter at 8.8 percent but climbed to 9.2 percent by the end of the quarter.”

Even prime loans, given to borrowers with good credit figures at lower interest rates are suffering. Nearly 8 percent of those are in foreclosure or are badly delinquent.

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