Wednesday, August 27, 2014
Inquirer Daily News

NJ Still Drowning in 'Underwater' Mortgages, New Study Reveals

Homeowners have it worse in New Jersey cities than almost anywhere in the nation, according to a new study of "underwater" mortgages, those with debt loads higher than the properties actually are worth.

NJ Still Drowning in 'Underwater' Mortgages, New Study Reveals

Homeowners have it worse in New Jersey cities than almost anywhere in the nation, according to a new study of “underwater” mortgages, those with debt loads higher than the properties actually are worth.

More than 50 percent of Newark and Elizabeth mortgages are underwater, trailing only Hartford, CT, among cities with more than 100,000 residents. Paterson is fourth at 49 percent, just ahead of Detroit. Jersey City ranks 32nd, according to the report, “Underwater America,” by a team of urban planners and sociologists from Occidental College, George Washington University, The New School, MIT, and the Nathan Cummings Foundation and published by the Haas Institute at the University of California-Berkley.

While foreclosure rates are dropping sharply in some parts of the country, New Jersey continues to buck the trend, on pace for more than 50,000 new filings this year. Authors of the study pointed out that homeowners with “negative equity” are two to three times more likely to default on their loans.

They offered several other insights to the Garden State’s continuing crisis. They found underwater mortgages are especially prevalent in communities targeted by predatory lenders, often those with large minority populations, as well as in areas where housing prices have not rebounded from the Great Recession.

Like the New Jersey cities, most others on the worst-off lists have more than 40 percent minority populations. Meanwhile, New Jersey remains an expensive place to buy a home, but the state ranks 48th in the nation in the post-recession recovery of residential property values.

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