• Haghi Law LLC

Facing Foreclosure in NJ in 2019? You're Not Alone

It is 2019 and in many parts of the country, the number of foreclosures has subsided dramatically as property values have stabilized. This is not uniformly the case, however, as a recent report by Attom Data Solutions indicates.

According to the property data experts at Attom, despite the nationwide drop in foreclosure activity in 2018, New Jersey still leads the country with the highest rate of foreclosure of any state, with approximately 1 out of every 76 properties having a foreclosure filing. New Jersey is significantly ahead of every other state in this regard. Despite the fact that more than 10 years have passed since the financial crisis of 2008, foreclosure rates in the Garden State are still quite high.

Even within New Jersey, there are areas that have an even more pronounced rate of foreclosure in 2018. For example, in Atlantic City, New Jersey, approximately 1 out of every 42 properties is in foreclosure.

What does this mean for you? Well, it means if you are possibly facing foreclosure in New Jersey in 2019, you are certainly not alone. It means that if you previously received a poor or temporary modification with an increasing interest rate, you are not alone. It means that if your case has been in limbo for years, you are not alone.

Many homeowners in foreclosure or pre-foreclosure during the period of 2009 to 2017 received loan modifications. While some were quite beneficial, others were merely temporary "band-aids" which provided immediately relief but no long-term benefit. What is an example of such a band-aid? Many modifications were given with a "step-rate", meaning that the rate would increase each year incrementally. While the beginning rate may have been a phenomenal 2%, after rate increases, the rate would reach 5%. That, combined with the fact that many of these loan balances were much greater than the collateral property's value, meant that at some point, the loan would become unaffordable again. In other cases, massive sums of principal were "deferred", meaning that they are still owed even if no interest is charged on them. Where a home was severely "underwater" (meaning worth much less than the mortgage loan balance), a principal deferment allowed for immediate affordability, but locked the homeowner into the property, because the entire amount would be due upon the sale of the property. With property values having not rebounded dramatically in New Jersey, many with principal deferments are stuck with properties that are still severely "underwater" and which simply cannot be sold.

If you are facing a possible foreclosure situation, it is important to be proactive and seek assistance. With the majority of foreclosures simply undefended, even as they linger on in the court system, homeowners often lose out on more advantageous settlements and potential modifications.

Banks know that most foreclosures are simply ignored or otherwise not contested. This was made clear during the peak of the foreclosure crisis when the vast majority of foreclosure cases were completely uncontested. Today and into the, as foreclosures still are a part of New Jersey's real estate landscape, banks will continue to expect the same type of apathy to continue.

If you are potentially facing foreclosure, or have faced it before and are concerned that it may become an issue again (such as if you received a temporary loan modification in recent years), I urge you to contact me to discuss what options exist and so that we may find the best possible solution for you and your family.



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