More Homeowners In Foreclosure

The Record ( — Saturday, December 6, 2008


A record 10 percent of homeowners with mortgages were in foreclosure or delinquent on their monthly payments in the third quarter, the Mortgage Bankers Association said Friday. That's up from about 7.3 percent in the same period a year ago.

The increase in job losses suggests the foreclosure situation will remain grim in 2009, according to Jay Brinkmann, Mortgage Bankers' chief economist.

In the Garden State, about 9.2 percent of mortgage holders were either in foreclosure or late on payments.

"We're being swamped with calls," said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, which offers counseling to homeowners in distress.

The Consumer Credit Counseling Service in Cedar Knolls also is being overwhelmed by calls from desperate homeowners, said Chief Executive Officer Sylvine Marabotto.

At Citizen Action and the credit-counseling service, housing counselors negotiate with lenders to restructure clients' mortgages. But some homeowners can't be helped, Marabotto said.

"Sometimes we have to say, 'You were given a mortgage you absolutely can't afford,' " she said. One homeowner, for example, started out with monthly mortgage payments of about $950 in an interest-only adjustable loan.

His mortgage payment has recently jumped to $4,000 a month, Marabotto said, adding, "That's not unusual."

Many of these homeowners will end up in bankruptcy or foreclosure, she said.

Even so, New Jersey's foreclosure and delinquency rates remain much lower than the levels seen in such distressed housing markets as California, Florida, Nevada and Arizona.

Brinkmann said earlier increases in the foreclosure and delinquency rates were caused largely by the problems in the housing industry, including overbuilding in some markets and easy mortgage money for unqualified home buyers.

Now, however, the housing market is getting slammed by rising unemployment, which will make it harder for homeowners to make their monthly payments.

The national jobless rate climbed to a 15-year high of 6.7 percent in November. While the Mortgage Bankers earlier predicted that the foreclosure situation would ease in 2009, "now we have to factor in job losses due to the recession," Brinkmann said.

The number of homes entering the foreclosure process is expected to reach about 2.2 million this year, the Mortgage Bankers say. Before the recent housing crisis, foreclosures typically averaged less than 1 million a year.

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