Recent Legislation in New Jersey May Slow Soaring Foreclosure Rates

November 22, 2012

Recent Legislation in New Jersey May Slow Soaring Foreclosure Rates

No homeowner wants to receive a letter in the mail warning of an upcoming foreclosure. Unfortunately, more and more homeowners in New Jersey are receiving these notifications. According to RealtyTrac, a firm that follows foreclosure rates nationwide, New Jersey saw a 66 percent increase in foreclosures this year.

Although government officials have limited ability to stop foreclosures, a new piece of legislation should at least help ensure homeowners are treated fairly. The new law, called the Foreclosure Rescue Protection Act, is designed to change how foreclosures are handled in New Jersey.

How Foreclosure Works

The foreclosure process is generally defined as the ability of a mortgage holder to gain ownership of a home, sell it and use the proceeds to pay off the mortgage. A mortgage holder is able to do this when the terms of the mortgage are broken, for example when a lender falls behind on payments. Although foreclosure has been a legal option for mortgage holders for some time, it has been exercised more frequently in the last few years as homeowners across the country struggle to make ends meet in this tough economy.

In some situations, a homeowner that falls behind on payments can avoid foreclosure. Some lenders are willing to negotiate and work out new payment plans that may be more manageable. The U.S. Department of Housing and Urban Development (HUD) counselors or an experienced NJ foreclosure lawyer may be able to help negotiate better rates with lenders and protect homeowners from predatory practices.

Unfortunately, some homeowners who attempt to avoid foreclosure find themselves part of a foreclosure recovery scam. These scams take advantage of people struggling to pay their mortgages by encouraging them to sign the property over. The Foreclosure Rescue Protection Act was passed to help protect homeowners from these predators.

Details of The Foreclosure Rescue Protection Act

The Act is designed to regulate foreclosure rescue companies and reduce the risk of scams.

Typically, these scams use someone posing as a counselor to purchase the home from financially stressed homeowners and rent it back to the owner, allowing the homeowners to remain in their homes. Unfortunately, the counselors often purchase the home for significantly less than it's worth, only to turn around and sell it for a profit.

The bill works to protect homeowners by putting guidelines on the price these counselors can offer for the home and prohibiting the collection of fees until the terms of the contract are completed. As a result, those in favor of the law hope to remove the risk of scam artists while allowing reputable foreclosure relief companies to continue operating in the state.

Although this law does offer a new range of protections, homeowners can still fall victim to foreclosure scams. As a result, if you or a loved one receives a foreclosure notice it is wise to seek the counsel of an experienced NJ foreclosure lawyer to better ensure your legal rights are protected.

Article provided by The Kridel Law Group
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