The Star-Ledger

To Face Foreclosure Fear, Jersey Offers Counseling

The Star-Ledger — Saturday, January 10, 2009

Star-Ledger Staff

Sometimes a homeowner's first response to the dreaded foreclosure notice is to ignore it.

But, experts say, ignoring it will only make things worse.

With dire predictions that more than 60,000 New Jerseyans could face foreclosure this year, state officials rolled out a program yesterday tapping counselors and mediators to help residents face the news and take steps to prevent losing their homes.

"It is an important step for the people of the state of New Jersey," Gov. Jon Corzine said at a news conference. "I think it will facilitate more people staying in their homes, make this process more responsible and balanced between the borrower and the lenders."

State officials said the program — a first in the country — could serve as a national model as foreclosures continue to flood the courts.

Attorney General Anne Milgram said subprime mortgages — loans advanced to people who don't qualify for mainstream mortgages, usually because they have poor credit — account for a disproportionate number of foreclosures.

In the third quarter of last year, only 9 percent of mortgages were subprime but they accounted for half the foreclosures, she said. State officials anticipate some 16,000 people will take advantage of the program by calling 1 (888) 989-5277. The hotline is staffed 8 a.m. to 6 p.m. weekdays.

"We urge all homeowners facing foreclosure to call, because the difference between calling and not calling could be the difference between keeping your home and losing it," Milgram said.

Piloted in Middlesex County and launched Monday, the free program links homeowners with certified housing counselors who can recommend mortgage workout options, including the waiving of fees and penalties or lowered interest rates. If no resolution is reached at the counseling phase, the case moves to mediation, at which time the homeowners may be eligible, based on income, for free legal representation.

Because only 5 percent of homeowners facing foreclosure ever ask for professional assistance, state officials plan to reach out, Milgram and Corzine said. Pamphlets explaining the program will be sent to homeowners three times during the foreclosure process: when the first complaint is filed; 60 days later, and again when the lender acts to seize the property. Homeowners are eligible to participate in the program until the time of a sheriff's sale.

Chief Justice Stuart Rabner said 500 of the 700 attorneys who volunteered their services since October have already been trained, and the remainder should be trained by the end of the month.

Some 40 counselors have signed up to work with homeowners in all of the state's 21 counties, said Marge Della Vecchia, head of the New Jersey Housing and Mortgage Finance Agency.

"One of the beauties of mediation is that it can produce creative, positive outcomes, the 'win-win' situations traditional litigation cannot always achieve," Public Advocate Ronald Chen said.

The initiative was praised by housing and citizens groups who said foreclosures threaten important gains they've made in helping more residents become homeowners.

"Many of our community development members had been making significant progress with neighborhood strategies that were taking off when this crisis hit," said Diane Sterner, executive director of the Housing & Community Development Network of N.J. "Now, they're engaged in a fight to keep what they've gained, as well as continue to move their strategies forward."

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, said the program gives homeowners a time-out in the foreclosure proceeding.

"By focusing on people before they reach the end of the line and providing resources that put the court system at the disposal of a homeowner looking to renegotiate with lenders, this program has the potential to help thousands of folks facing foreclosure save their homes," she said.

Top Top | NJCA Homepage | NJCA in the News