Bloomberg News reports that New Jersey has now passed Nevada and is #2 behind only Florida in the number of loans in serious default. (Bloomberg, Sept. 18, 2012 “New Jersey Housing Suffers as Defaults Exceed Nevada: Mortgages). As we have reported, a lot of existing foreclosures were put on hold until the courts sorted out new requirements to protect against “robo-signing”. We hear that atop the large number of pending cases, a flood of new cases expected to be filed in the next few months. Right now, Bloomberg reports, there are 60,000 pending open foreclosures, with borrowers who have not made a payment in the past 934 days, according to Lender Processing Services Inc.
This is going to be good news for mortgage foreclosure attorneys, both those who file these suits and those who defend. Those who want to keep their homes will need the help of experienced counsel. We still believe many mortgage lenders are going to have problems if challenged in meeting their burden of proving that the plaintiff in foreclosure actually holds the mortgage with the right to sue. Other defenses may be available.
As we have reported elsewhere, the loan modification process has been disorganized and uneven. But for those who want to keep their homes, a Chapter 13 Bankruptcy may provide help in a variety of ways. (see our other blog posts on this). Mortgage lenders, if acting rationally, would be making deals. But few who have dealt with process have good things to report about how it is being handled. Many have horror stories.
In the meantime, we can expect the long delays (about 3 years) from start to finish of a foreclosure will keep many defaulting homeowners in their homes, giving them a much-needed break and opportunity to settle other debts. Clearly, the foreclosure system is not helping lenders.
According to Bloomberg, the “shadow inventory” of foreclosed properties is still increasing in the Northeast. They report that the hidden supply of homes dwarfs the “visible inventory” of homes for sale.
By all accounts, this mess is not getting better. We have suggested some of the reasons for the logjam in other blog posts. But eventually it will all get resolved. It just shouldn’t take so long. This situation is not helping our economy.
For more information, please see our other blog posts. Steven Neuner is available to assist borrowers with defending foreclosures or seeking other solutions.