The New Jersey housing market stands out for its high foreclosure rates, lengthy foreclosure timelines, and many abandoned properties; but now the state is making headlines for pioneering federal legislation aimed at preventing and reducing zombie homes.
High Foreclosure Rankings
New Jersey ranks high on several foreclosure-related statistics in RealtyTrac’s latest foreclosure report.
The state ranked second for foreclosure activity in July with one in every 215 homes receiving a foreclosure notice in July.
Nationwide, the foreclosure rate was 0.40 percent of homes with a foreclosure filing in July. New Jersey’s foreclosure rate was more than double that at 0.98 percent. New Jersey’s foreclosure activity remains 215 percent above pre-recession levels.
Nationally, foreclosures declined in July, but New Jersey was one of 26 states to report rising foreclosures year-over- year with an increase of 56 percent. New Jersey also tops RealtyTrac’s list of states with the longest foreclosure timelines at 1,249 days.
New Jersey also notably had the most zombie foreclosures in the nation with more than 4,000 vacant properties sitting in limbo.
On the Bright Side
Despite these glum statistics, things are starting to look up in New Jersey’s housing market. The New Jersey Association of Realtors (NJAR) reported in June, “Sales and prices have been going up in most areas, while the number of homes for sale and total months’ supply of inventory have been going down.”
In June, home sales rose 9.9 percent over the year, while the number of homes listed for sale declined 14.7 percent. There was a 7.4 months’ supply of homes for sale in June, according to NJAR.
Warding Off Zombies
Sen. Bob Menendez took up the zombie home cause and has championed new federal legislation aimed at helping neighborhoods and communities from their impact.
“Zombie foreclosures threaten our communities and scare away new homebuyers and investors, which leads to neighborhood blight and plummeting values of surrounding properties,” Menendez said.
His new legislation, passed in June, requires mortgage servicers to let homeowners know that they do not have to immediately vacate their home when the foreclosure process begins. They can stay until state law requires them to leave. The servicer must also let the homeowner know that he or she is responsible for property taxes and other fees until the foreclosure process is complete.
If a servicer stops foreclosure proceedings, it must notify the homeowner and the municipality.
The new law also cannot cease foreclosure proceedings on any home with a loan backed by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration.
“Our neighbors and neighborhoods are still trying to recover from the foreclosure crisis and the outbreak of zombie foreclosures that have menaced our communities,” said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey when the new legislation was announced.
“We applaud Senator Menendez for his leadership on this issue by introducing policies that would help our communities fight back,” she said.