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BY GERALD J. ROBINSON
NEWJERSEYNEWSROOM.COM
In states like New Jersey where foreclosures are handled through the courts, the foreclosure pipeline is clogged.
The New Jersey foreclosure pace is glacial. It’s reported that to clear the pipeline at the present rate it would take 49 years. It’s the same story nationally – the foreclosure timeline has drawn longer and longer.
For the huge number of homeowners in or near foreclosure, this slow pace provides welcome breathing space. Nationally the numbers are huge – roughly 2 million homeowners are in foreclosure and another 2 million are coming close.
A collection of factors explains the snail’s pace. The sheer volume of cases flooding the courts has overwhelmed them, producing large backlogs. The scandal of robo-signing where lenders produced illegal documents that surfaced last fall has caused lenders to suspend many foreclosure actions while they clean up their documentation mess. And it seems that banks are not so anxious to increase their foreclosed home inventory, perhaps figuring that a rising tide of empty homes is compounding the decline in home prices that is feeding the default numbers.
Then there are the new mediation procedures that states and courts have injected into the home foreclosure process. In New York, for example, the legislature has mandated that the borrower and lender meet to determine if a modification of the mortgage debt is possible that would permit the homeowner to stay in place. In Florida, lenders who file foreclosure complaints must simultaneously initiate a mediation process with the borrower under the guidance of a trained mediator. These procedures can take months to complete.
Another factor is that many more homeowners are now fighting the foreclosure process, producing the inevitable delays that accompany litigation. As we’ve noted previously in this column, borrowers can stop making mortgage payments but stay in their homes by fighting foreclosure. When they actively resist foreclosure proceedings they may not be forced out of their homes for months or even years, even though they make no mortgage payments and pay no rent. In some cases fighting the bank even may lead to a mortgage modification while foreclosure proceedings are pending, allowing them to stay in their homes permanently.What does all this mean for the homeowner who wants to keep his or her home from being taken away?
Be proactive.
All the factors described above slowing the pace of foreclosures are beyond the homeowners’ control, except one: fighting the foreclosure process. Whatever good luck may bring in breathing space from the uncontrollable factors, homeowners can make their own luck by fighting foreclosure, both in the mediation and litigation process.
Homeowners who can’t afford a lawyer to help should check out free assistance from the local legal aid society.
Contact Gerald J. Robinson at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
A common thought is that the banks don't want to foreclosure. This is an illusion. Often the banks get the home, and sometimes have Credit Default Swaps against the home. So when the home owner goes into foreclosure, the bank get the home and upto 3 MILLION dollars on the CDS. It is a win-win situation.