Suburban Trends

Foreclosure 'Tsunami' Doesn't Spare Region

Options available for hamstrung homeowner

Suburban Trends — Wednesday, February 4, 2009

BY DONNA ROLANDO
Staff Writer

Just when you thought it couldn't get any worse, foreclosure filings in New Jersey hit almost 70,000 for 2008, and experts say efforts to slow a "foreclosure tsunami" have failed.

In New Jersey, foreclosure filings rose 10120 percent from 2007 to 69,612 in 2008, according to RealtyTrac, an online marketplace for foreclosure properties.

Localizing it a bit more, one can enter West Milford's ZIP code on the RealtyTrac Web site to come up with 648 properties in default or pre-foreclosure or enter Butier and Kinnelon's joint ZIP code to come up with 1,240 defaults. Also pictured are house photos and street locations.

Nationwide, 3.1 million foreclosure filings — including default notices, auction sale notices and bank repossessions — were reported on 2.3 million U.S. properties during 2008, an 81 percent increase from 2007. This means about one in 54 properties received at least one foreclosure filing during the year.

James Saccacio, CEO of RealtyTrac, said that efforts to stop this downward spiral have not provided much of a rescue.

"Clearly the foreclosure programs implemented to date have not had any real success in slowing down this foreclosure tsunami," he said.

They prey on strapped homeowners

In addition, warnings have been issued about scam artists preying upon every homeowner's foreclosure nightmare, charging exorbitant fees and taking over titles in a false rescue from foreclosure.

The New Jersey Department of Banking and Insurance advises homeowners to seek counseling when their home is at risk, but to check qualifications carefully because the department has seen an increased number of scam artists.

Where real help can be found

If you need legitimate help resolving foreclosure action, the Office of the Courts Foreclosure Mediation Program is available with housing counselors and trained mediators. The staff can propose a work out and payment arrangements between distressed bonowers and their lenders.

While the foreclosure situation seems dismal and our neighborhoods clearly are not immune, state and federal experts say just about the costliest mistake when facing foreclosure is inaction.

A common thread in advice handed down to homeowners is to respond to every notice their mortgage company might send.

"Don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house," recommends the U.S. Department of Housing and Urban Development (HUD) on its Web site.

"Lenders do not want your house," HUD's 'Tips for Avoiding Foreclosure" continues, "they have options to help borrowers through difficult financial times."

One of those options, loan modification (basically lowering monthly payments so that the owner can afford to stay there) is the panacea for homeowners. Homeowners can attempt to talk to their own mortgage company about such options, but they can also seek help from a HUD-certified counselor, especially if their mortgage company seems reluctant to green light a modification. There are qualified firms, like New Jersey Citizens Action, that perform these services free of charge but often it means documenting your hardship and finances.

Another way to turn back the tide of foreclosures is by meeting face to face with mortgage companies and counselors at foreclosure prevention workshops in New Jersey.

The office of Senator Robert Menendez (D-NJ) has taken an active role in these foreclosure clinics in response to a deluge of calls from constituents seeking help.

"We started getting many calls" about foreclosures, so the senator began getting involved, said the senators press secretary Olga Alvarez. Participation in a foreclosure prevention workshop may speed up relief but homeowners should still take an active role in their case.

Poor credit can block the way to refinancing

Refinancing is another way out from under the oppressive debt of a sub-prime mortgage, but Bill Lawrence, general manager of Blue Realty in Wayne, which counsels homeowners, said that often "if they're facing foreclosure their credit is so far gone." In this case, it might be difficult to get any lender to take a bite at refinancing.

Blue Reality's homeowner assistance program covers many bases, from talking to the bank, to counseling clients on options for selling the home.

"We try to help them retain their house. Unfortunately bad things happen to good people," Lawrence said, indicating that sometimes selling the house is the only practical option.

A short sale could be a good alternative to foreclosure when homeowners can't make a financial arrangement to save their home, he said, and it is certainly less damaging to one's credit.

Lawrence said it's in the best interest of the bank to avoid foreclosure because it is more likely to get the home in good shape and ready for sale.

Brett Jowett, a sales agent with Blue Realty, said that with a short sale the homeowner is able to get out from under their debt and turn over their home even if they owe more than the likely selling price.

Because the foreclosure process can cost about $75,000, the lender may be willing to take a reduced sale price if it saves the time and expense of foreclosure, Jowett said.

The problem with short sales is that they are not always short. He said that all too often short sales fall through, because potential buyers tire after waiting months to take ownership of the house.

Pointing out that "practice makes perfect," Jowett said that lenders are trying to smooth out the process.

Another option is to sign the deed over to the bank in Leu of foreclosure. At times mortgage companies are willing to pay moving expenses for those who spare them a costly court foreclosure process through this means, Lawrence said.

By taking responsibility and not ignoring matters, Jowett said homeowners can hope to avoid a seven-year sting to their credit.

Resources for homeowners

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