More than 300 Sandy-affected homes in Monmouth and Ocean counties slipped into foreclosure during the first 10 months of 2014.
Hundreds of families forced from their homes during superstorm Sandy now face a new tempest: foreclosure on the properties they are struggling to rebuild.
An Asbury Park Press analysis has identified 305 Sandy-affected homes in Monmouth and Ocean counties that have been pushed into the property-seizure process during the first 10 months of 2014.
Of the 305 homes in foreclosure, 134 incurred some level of damage or inundation, the Press found. The remaining homes were found to be within the flood zones, which could have dramatically altered neighborhoods, affected property values and spurred foreclosure.
Experts say the glut of foreclosed homes in New Jersey makes it difficult to quantify what impact the devastating October 2012 storm had on borrowers’ ability to stay current on their mortgages. But they agreed Sandy definitely plays a part in the ongoing foreclosure crisis in the Garden State, which by percentage has more distressed properties than any state in the nation.
“Time delays are creating a tremendous challenge for the homeowners because paying two years of a mortgage payment on an uninhabitable property is creating a chasm that they cannot fill,” said Sue Marticek, the executive director of the Ocean County Long Term Recovery Group, a nonprofit that connects disaster survivors to available resources for rebuilding.
The Press matched federal mapping data on 84,000 Sandy-affected homes in both counties with foreclosure data provided by RealtyTrac, a private real estate tracking firm. Of the 84,000 houses within the flood zones, 5,100 suffered damage ranging from minor to destruction, based on data from the Federal Emergency Management Administration.
Steve and Debra Corrado and their 10-year-old daughter and 6-year-old son live in a rental a couple blocks from the Aldo Drive, Toms River, home they hope to elevate to FEMA-approved flood heights later this year. Two days before Christmas, the Corrados were served a foreclosure notice because, they say, they were unable to afford the $2,000 monthly rent and the $2,500 monthly mortgage bill on the income from their jobs as an organized labor representative and a payroll specialist, respectively.
They made a choice to pay for the rental home, not the damaged house they hoped to return to some day. The Corrados — along with at least 36 other Toms River families who saw their Sandy-affected homes enter into foreclosure last year — must consider the possibility that the keys to their repaired and elevated home will be handed over to the bank.
“This has been such a rollercoaster ride. I never thought we’d be in the position where we don’t have a home,” said Debra Corrado. “We don’t want to go through all this and then have the bank come in and take this home from us.”
A spokeswoman for M&T Bank, which holds the note on the Corrado’s $177,000 home, declined to comment except to say the Buffalo-based bank follows the law on responding to delinquent payments in disaster zones. Homeowners were given a one-year grace period by the federal government after Sandy, meaning that year’s payments were tacked on to the end of the loan.
The Press’ analysis shows that many of the foreclosures are in waterfront towns with year-round, moderate-income populations. Among the findings:
• Little Egg Harbor, with 39 defaults in 2014 in the flood zone, had the most Sandy foreclosures of any town in both counties. Those foreclosures in inundated areas represented 60 percent of the town’s total foreclosure list.
• Along the working-class Bayshore, 48 percent of the homes that slipped into foreclosure last year in Keansburg were affected by Sandy, and 79 percent in Union Beach.
• In larger municipalities like Brick and Toms River, Sandy-linked foreclosures are contributing to a foreclosure docket that has swelled in the last two years. Brick saw 15 percent of its 201 foreclosures within the Sandy flood zone. In Toms River, it was 12 percent of 292 homes going through the seizure process.
Sandy and its affect on housing has saddled the state with an additional economic burden, an unwelcome ingredient in New Jersey’s already weak recovery from the national recession, said James Hughes, dean at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, New Brunswick.
“Most states have been clearing out their foreclosures and most (state) economies have been rebounding better than New Jersey,” Hughes said. “We have the residual problem of a high baseline of foreclosures just because of the length of time it takes to complete the process in the courts, and then the secondary factor is the aftershocks of Sandy.”
About 1 in 9 mortgage loans in the state — or nearly 100,000 properties — is distressed, meaning it is either in foreclosure or 90 days in arrears for payments, according to Patrick O’Keefe, director of economic research at the New York-based accounting firm CohnReznick. That’s the highest rate in the nation.
Through October of last year, there were 46,000 foreclosure filings in New Jersey and 1 in 7 of those homes in dispute was in Monmouth and Ocean counties, according to the state Administrative Office of the Courts. That’s in line with the counties’ previous share of the foreclosure pie, but the pie is now bigger: Foreclosures are up 15 percent compared to the same period in 2013 and on par with the dark days of the real estate bubble collapse in 2010.
Several of these Sandy-related foreclosure stories boil down to the same basic circumstances: a typical middle- or lower-income family learns that the costs of renting while still paying mortgage on a home they can’t live in is either immediately unaffordable or becomes so the longer they are unable to return home. Underwhelming payouts from flood insurers and slow-moving recovery programs are sinking their budgets, the families and housing advocates say.
As of November, Bud and Sue Kenneally owed more than $15,000 on the loan for their Keansburg property, which was valued at $134,000 before being ruined by Sandy. That’s the same house Sue spent her 50th birthday watching a wrecking crew level. The couple, their daughter and two grandchildren now live in a home on Naval Weapons Station Earle, allowed because of Bud’s status as a U.S. Navy veteran.
It’s not cheap at $2,429 per month, but the Kenneallys said there wasn’t much of a choice at the time. The rental provides plenty of space for the family and the appliances and household items they were able to salvage from their flooded home.
Sue and Bud, a maintenance worker for the county, were able to stay current on the mortgage payments, using their savings and six months of assistance from the state’s Sandy Homeowner and Renter Assistance Program. But all that’s gone, and so is their ability pay mortgage on an empty lot.
“We’re living off the credit cards to put food on the table,” said Sue Kenneally, a school bus driver.
Tammori Petty, a spokeswoman for the New Jersey Department of Community Affairs, which directs the federal disaster aid at the state level, said the department is aware that displaced homeowners still need help with temporary housing costs and that New Jersey “is exploring ways to address this issue.”
The state’s primary homeowner rebuilding initiative, the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) program, has been criticized for repeated hiccupsand its stop-start nature.
The Kenneallys and the Corrados are in RREM, but neither has a firm date for when they should expect to move back home.
Debra Corrado said they are expecting a quote on elevation costs from their contractor soon; their fingers are crossed that it doesn’t exceed their RREM award. The Kenneallys were approved for the maximum grant of $150,000, but their lot on Ramsey Avenue sits vacant as they wait for money to be released.
The threat of foreclosure — neither has a court calling for their eviction yet — further clouds their futures.
“We took everything from our savings, we took 401(k) money. We’re dry,” Debra Corrado said. “It’s pretty scary.”
Exactly how many people are in similar situations is unclear.
New Jersey is a judicial foreclosure state, meaning each foreclosure is subject to supervision through the courts. This provides additional protections for homeowners, but it also slows down the speed at which a foreclosed home transfers back to the lender.
“To the extent that Sandy or any other calamity further pressured the ability of homeowners… to meet their obligations, (Sandy) was simply complicating an already difficult situation,” O’Keefe said. “We might have been able to see statistically the Sandy effect (on foreclosures), but we have such an elevated rate of distressed mortgages that they’re hard to find.”
Last year, the Ocean County Long Term Recovery Group spent $602,000 on temporary housing for active cases — about $1 out of every $4 in assistance the group distributed. Marticek, the group’s director, said it has to restrict who will be helped with rent to those who know their construction schedule because temporary housing costs alone would devour their $2.5 million budget.
“We could literally spend all of our money in one day on rental assistance but what we’re trying to do is get the most people back home for good,” she said.
Russ Zimmer, @RussZimmer Russ Zimmer: 732-557-5748, razimmer@app.com
http://www.app.com/story/news/investigations/watchdog/government/2015/02/12/nj-sandy-foreclosures-increasing/23310009/