EDITORIAL: The Crisis is Spreading
We're used to seeing terrible delinquency numbers in places hit hard by the housing collapse or by high unemployment. California, Nevada, Arizona, Florida, Ohio, Michigan, all of these have been hurt badly. But now, it seems, the crisis is spreading.
Take New Jersey. The Garden State enjoyed prosperous times and a quickly appreciating housing market this decade. But now, it is approaching 4.5% of mortgages in foreclosure, according to the most recent figures by the Mortgage Bankers Association.
On about 1.25 million mortgages currently being serviced, that would mean more than 50,000 homes being foreclosed. Nearly 20% of subprime New Jersey mortgages are in foreclosure, which comes to 25,000 busted mortgages. Also, 4.4% of Federal Housing Administration mortgages are in foreclosure, as well as 3.4% of Department of Veterans Affairs loans.
New Jersey isn't alone. Maine has nearly 4% of mortgages in foreclosure, and Rhode Island and Maryland both have more than 3%.
Of course, these Eastern states are still nowhere near the big six. Florida has an astounding 10.56% of mortgages in foreclosure, according to MBA's figures for the first quarter. That's an amazing 350,000 houses, seven times more than New Jersey.
Nevada ranks second, with 7.83%, but it should be noted on a much lower base of mortgages serviced. Still, that's 40,000 homes.
California takes the bronze, with 5.21% of more than five million loans in foreclosure. That's more than a quarter of a million homes.
With the national foreclosure total up 27% in just one quarter, obviously it isn't time yet to declare the foreclosure crisis over.
It's time to get serious about loan modifications and workouts. Servicer-arranged modifications are redefaulting at enormous rates, in part because many of the mods add the current delinquent amounts in, meaning the homeowner's monthly payment goes up. That one is a clear losing strategy.