Five Years Straight — NJ Still No. 1 (in a Bad Way) for Foreclosures

For the fifth year in a row, despite a declining foreclosure rate, New Jersey in 2019 posted the nation's highest rate of foreclosure filings.

Fewer New Jersey homeowners entered the foreclosure process in 2019 compared to years past, but experts claim the economic clock is ticking on the state's chances to reach a healthy level of recovery from the Great Recession.

In the Garden State, foreclosure filings were registered on .82% of housing units in 2019, according to year-end figures released by ATTOM Data Solutions. Nationally, there was a filing — default notice, scheduled auction or bank repossession — on .36% of units. New Jersey has led the nation since 2015.

Atlantic City and Trenton topped the entire nation for rates when considering metropolitan areas with a population of at least 200,000, the data show. Cumberland County was the worst performing county nationwide.

"What we know is that when the next recession arrives, and it will, that all of this gets dramatically worse," said Jeffrey Otteau, president of Otteau Valuation Group in Matawan.

Otteau said what's most concerning is that New Jersey is in this position more than 10 years since the last recession ended, and in the midst of an economic boom nationally.

More homes were sold in New Jersey in 2019 than in any other year in state history, Otteau noted. Selling prices in the Garden State, however, remained below 2006 levels, while selling prices nationally were 25% higher than in 2006.

"That home prices 15 years later are still less than they were back in 2006 explains the foreclosure problem, because what it is saying to us is that homeowners have still not recovered the equity in the homes that they bought 10 and 15 years ago. And that is one of the principal triggers of foreclosure," Otteau said.

According to Otteau, New Jersey's lingering foreclosure problem can be attributed to three main factors: a regulatory and tax policy which slows economic growth and makes it more expensive to live in the state; restrictive zoning controls at the municipal that result in fewer affordable single-family homes; and a judicial foreclosure process that can tie up foreclosure actions until the case gets in front of a judge.

In April 2019, Gov. Phil Murphy signed a package of bills designed to assist homeowners facing foreclosure — among them, a bill that codifies into law a mediation program that helps families resolve cases without being forced out of their homes.

New Jersey in 2019 saw one of the largest declines (21%) in foreclosure starts from the year prior.