New Jersey Foreclosures Down: Likely Not a Cause For Celebration
Unlike many other states, in New Jersey, lenders have to go to court to foreclose on a property. This process slows down the rate of foreclosures considerably.
October 23, 2012
New Jersey Foreclosures Down: Likely Not a Cause For CelebrationSecond-quarter results were recently released that detailed how the economic crisis is affecting foreclosure rates in New Jersey. Overall, during the second quarter, one out of 11 New Jersey home sales involved a foreclosed property, compared with one out of four nationwide. In addition, the number of New Jersey foreclosure sales decreased by 40 percent from last year.
However, the apparent decrease in foreclosures may be no cause for celebration; it may be owing to how the state processes foreclosures, rather than economic recovery. Unlike many other states, in New Jersey, lenders have to go to court to foreclose on a property. This process slows down the rate of foreclosures considerably. Currently, New Jersey foreclosures take more than two and a half years to complete, because of the requirement of going to court.
Experts say although this delay benefits homeowners in arrears on their mortgage by delaying the seizure of their house, the delay is likely to keep housing prices low for years, as many properties will be subject to foreclosure for a long time.
Once these properties are eventually foreclosed upon, they will likely be sold at a discount, which will drive down home prices across the state. During the second quarter, the average foreclosed property in New Jersey sold for 37 percent less than market values. Despite home values increasing in most states, New Jersey home values fell 0.8 percent in July alone.
How Bankruptcy Can Help
During the second quarter, New Jersey had the dubious distinction of passing Nevada to become the state having the second highest rate of homeowners who are seriously delinquent--being 90 days late or in foreclosure--on their mortgages. For the many New Jersey homeowners in this situation, bankruptcy might be a viable option.
Bankruptcy can be especially beneficial for homeowners who have a regular income, yet are behind on their mortgages. Chapter 13 bankruptcy, for example, allows such homeowners to pay off the late payments of the mortgage according to a payment plan. Since the payments made under the plan can be made over a period as long as five years, bankruptcy can stop foreclosure proceedings while the homeowner catches up with his or her mortgage. Assuming that the payments are regularly made under the repayment plan, the homeowner can avoid foreclosure and continue to live in his or her home.
In addition, Chapter 13 bankruptcy can be beneficial for homeowners owing payments on a second or third mortgage. If, due to falling house values, there is insufficient or no equity in the home, the bankruptcy court may be able to relieve the homeowner of the obligation to make payments on the second or third mortgage, in some cases.
Bankruptcy is a complicated area of the law and how it would affect your situation depends on many factors. If you are facing foreclosure, it is a good idea to consult with an experienced bankruptcy attorney. An attorney can advise you of your rights, your debt-relief options and recommend the best course of action for your individual situation.
Article provided by Brenner Brenner & Spiller
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