From the Star Ledger:
In the past six months, an eerie feeling has settled in the offices of housing counselors and attorneys who confront the foreclosure crisis head-on and help distressed homeowners in New Jersey. The phone hasn’t been ringing any less than it did at the height of the storm, but what is about to hit may be greater than anything the group has seen so far.
Foreclosure filings are down 86 percent so far this year from last, owing in part to a December crackdown by the state’s chief justice that effectively halted proceedings by the country’s biggest mortgage lenders and service companies, according to court data. But lenders are waiting to file an estimated 28,500 foreclosures, and another 55,000 mortgage loans are currently more than 90 days delinquent, according to LPS Applied Analytics, a real estate data firm that tracks mortgage performance. At the current rate, it would take 49 years for banks to clear the logjam of mortgage loans that are currently in the foreclosure process or are more than 90 days delinquent, LPS found.
Those figures are a sign of what is to come when lenders are able to begin filing again, and the pipeline speeds up.
“It’s what keeps me awake at night,” said Peggy Jurow, who leads Legal Service of New Jersey’s Foreclosure Defense Initiative. “It’s what keeps my colleagues and me strategizing all the time.”
“What are we going to do,” she asked, when these cases get filed?
The foreclosure process came to a halt on Dec. 20, when Chief Justice Stuart Rabner announced an initiative to address fears homeowners were unnecessarily put into foreclosure and judges had inadvertently “rubber-stamped” files that had inaccurate or inadequate paperwork.
In March, six of the country’s biggest financial institutions — Bank of America, JP Morgan Chase, GMAC Mortgage, Citibank, OneWest Bank and Wells Fargo — agreed to submit extensive documentation of their foreclosure processes and outline any revisions they have made. A court-appointed special master, retired Superior Court Judge Richard Williams, is reviewing the material and will report on whether the banks have satisfied a number of changes.
Bankers in New Jersey have told John McWeeney Jr., president and CEO of the New Jersey Bankers Association, that the time it now takes to complete a foreclosure has stretched to nearly three years.
“The reaction of the Supreme Court certainly delayed a large volume of foreclosures that otherwise would have been put in process, so I would expect that that will eventually hit and increase the number of foreclosure filings,” McWeeney said.
When the foreclosure filings start winding their way through courts again, the influx will affect everyone in the industry.
“There are going to be very substantial numbers of foreclosures that are going to hit the market, all of which is problematic and obviously has a negative impact on housing values,” said Robert Levy, executive director of the Mortgage Bankers Association of New Jersey.