Home foreclosure filings skyrocketed in Atlantic City in February compared with the same month last year, an increase linked to the state’s legal processes and the lingering effects of Hurricane Sandy.
One out of every 398 homes in Atlantic City had a foreclosure related filing, a 254 percent jump from the same month a year ago, according to a new report from Irvine, Calif.-based RealtyTrac Inc., a housing data provider.
“After Sandy there was a foreclosure moratorium in parts of the New Jersey coast,” said Daren Blomquist, RealtyTrac Vice President. “And the other issue there is you have homeowners who had houses that were damaged and the rehab wasn’t covered by insurance so those homeowners might be more motivated to just walk away.”
New Jersey had a total of 4,810 homes with a foreclosure-related filing in February, an increase of 108 percent from the same month last year, the report shows.
With one out of every 739 homes incurring a foreclosure-related filing in February, the Garden State climbed to the fourth highest foreclosure rate among all 50 states, the first time it cracked the top five since October 2005.
New Jersey, along with Pennsylvania and Delaware, is a judicial state, meaning all foreclosures are processed through the state’s courts.
“That is a factor,” Blomquist said. “The courts may have slowed things down to ensure that foreclosures were done properly.”
Aside from New Jersey, Florida, which has the highest foreclosure rate in the country, and fifth-ranked Illinois are judicial states. Maryland and Nevada, which have the second and third highest rates, are not.
Even though New Jersey is going against the national trend, across the country foreclosure related filings plummeted 27 percent, Blomquist cautions that the situation is not completely dire.
“It is not a ‘sky is falling’ situation,” he said. “But it is going to have a negative impact on the market in the short-term as it absorbs this distress. It will weigh down home prices and home values in the short-term.”
The report shows one out of every 50 homes in the Philadelphia metro region, which includes Camden and Wilmington, had a foreclosure filing in February, nearly a 20 percent jump from February 2013.
But the New Jersey counties that fall in the Philly metro area likely spurred the rise, Blomquist said.
Filings in Pennsylvania fell 5 percent, while Delaware remained flat with a 1 percent increase.