New Jersey foreclosures and loan modifications: improving and moving faster, but for how long

I just moderated a seminar for lawyers on the current state of foreclosures and loan modifications. The latest intelligence is that new foreclosure filings in New Jersey are moving from the filing of the Complaint to Sheriff’s Sale in 6 to 12 months. This is a far cry from the three-years-plus that was the accepted situation 6 months ago. The reasons are several. First, due to a 2011 temporary moratorium on filing and processing of foreclosures by six major mortgage loan services, the backlog of pending cases has been largely reduced. Second, the Superior Court foreclosure processing unit has add staff to deal with the workload. Third, the Court has set up electronic filing systems for foreclosures, that make it simpler and easily for court personnel to process new filings.

How long the current relatively fast processing of foreclosures  will continue is uncertain. Currently, there are 60,000 to 100,000 pending cases. Many, we are told, are older cases stalled by new documentation requirements for entry of a foreclosure judgment. And several sources has told us that there is a potential avalanche of other foreclosures waiting to be filed. Some believe that when this hits, we will be back to a three or even four year delay from start to finish.

Several unknowns still exist. Are lenders more willing to modify mortgage loans? The best answer is, it depends on who holds the loan. (Remember that almost all these mortgages are held by investor trusts. The “lender” is really only a loan servicer hired by the trustee). There are new state programs to help homeowners keep their homes. But many sources report instances of ridiculous and inconsistent treatment by lender representatives who process loan modification programs. It is still a long and uncertain road. Seeking Professional help, either through legal counsel, a HUD-qualified housing counselor, or one of the reputable sources who prepare the applications, is a wise move.

We are seeing more instances in which substantial reductions in loan balances are being offered by lenders. This is a hopeful sign as well.

Stay tuned. It is still wild and woolly out there.

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