Herald News

Keep Eye On Foreclosure Process

Herald News — Friday, August 19, 2011

Foreclosure season is starting again in New Jersey. This week, five out of six big lenders told to freeze the practice seven months ago were given the go-ahead to resume taking ownership of properties in default.

It is bad news for a slumping housing market, and for stressed homeowners contending with dismal unemployment and underemployment trends. The number of foreclosures was down sharply this year, to just 6,000 through July, compared with 58,000 in 2010.

The green light is for five banks — Bank of America, Citibank, JPMorgan Chase, Wells Fargo and OneWest — and comes after a comprehensive review of their practices. The freeze and review were ordered by state Supreme Court Chief Justice Stuart Rabner after widespread reports of sloppy legal documentation of homeowners' payment records and the ownership of mortgages. Retired Judge Richard Williams will continue to monitor the banks for the next year, to ensure they are following practices that ensure documents are actually submitted by homeowners or their agents, and that all paperwork is personally reviewed.

That wasn't the case through 2010, when mortgage agents allegedly used fake signatures and approved foreclosures by the thousands without reading through every page. Many major lenders voluntarily opted to halt foreclosures nationwide in reaction to the "robo-signing" scandal. Federal regulators negotiated a new course of action for the banks, who in April agreed to pay restitution to homeowners who had been wrongly foreclosed on. Unfortunately, that deal excluded the third-party servicers that contributed to much of the problem.

As foreclosures increased over the past several years, foreclosure "rescue" companies swooped in, targeting homeowners with false promises of help.

A bill passed by the Legislature and awaiting Governor Christie's signature, A359, aims to protect homeowners from these scams. The bill mandates they offer owners 82 percent of fair market value of the property, as a way to protect vulnerable citizens down on their luck from taking pennies on the dollar in lopsided negotiations. It has won the support of state associations of Realtors, bankers and land title agents, as well as New Jersey Legal Services and New Jersey Citizen Action.

The grim tidal wave of distressed properties has been gathering offshore for some time. Since the job market remains grim, and in the absence of declining property tax bills and health insurance premiums, it's time to brace for that wave to hit. The right time to set better ground rules for the foreclosure game is now. Sign A-359. And keep an eye on the banks.

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