Story by Julia Palazzo – @julialpalazzo
We have all seen the square sign that sits on the front lawn of a home: “FOR SALE” with a box below it that says “FORECLOSURE”. If you drive through the streets of New Jersey, you might be seeing more than a few.
According to NJ.com, New Jersey is the state with the most foreclosures and the percentage of vacant homes is overwhelming. One in every 171 homes across the state had filed for foreclosure during the third quarter of 2015. The question to ask is, why are so many homeowners facing foreclosure? Foreclosures do not go into effect when a homeowner misses one payment. In fact, it is a much lengthier process.
Banks expect a monthly payment, but if a problem arises, it’s possible to get an extension. Even if you didn’t make a payment then, it is likely the homeowner will just have to pay a late fee. After one late payment, banks would still not proceed with distributing a foreclosure statement.
Delaying payments without an explanation can lead to that unpleasant notice arriving in your mailbox. The notice includes a confirmation that the bank will proceed with foreclosure proceedings and scheduled the sale of the home at an auction.
There are many reasons why a home can be placed into foreclosure: unpaid taxes, falling behind on a mortgage, fraud or unemployment. Real Estate Attorney Adam Lefkowtiz in East Brunswick says he has dealt with a variety of cases.
“When banks hand out money, its easy for people to get in over their head. A lot of people do not carefully consider,” he said.
He thinks the foreclosure rate is so high because of the state’s expensive living costs. There is greater access to cities like New York and Philadelphia and great school systems. But despite the high price of living, families’ can still live affordably.
“The correct approach is the traditional approach…the best way to avoid foreclosure is to live within your means and to be honest,” he said.
Lefkowitz said that every bank is different and most understand difficult situations including when there are children living in the home. However, it doesn’t always come into play.
“I haven’t seen a lot of banks where family dynamics come into account, but it may delay the process or they agree to an extension,” he said.
Through the anguish and agony of going through the foreclosure process, there is a ray of hope at the end of what can be a dark tunnel. If a homeowner is at risk of losing their home, several resources and organizations are available to get back on track. New Jersey Citizen Action is a group that fights for social justice and offers foreclosure prevention services across the state. NJCA increases economic opportunities for low and moderate income individuals and families, along with providing loan counseling programs.
The organization helps out those in need, especially with New Jersey’s foreclosure rate being the highest.
“I think it’s because we have some of the highest property taxes and due to our unemployment rates,” said Bonita Holmes, Director of Loan Counseling and Loss Mitigation at NJCA. “I recommend seeing a certified financial counselor immediately to negotiate and prevent facing the foreclosure stage”.
Be warned, even if your home is not foreclosed, it can affect you. The Alliance for a Just Society found property tax rates increased in areas with foreclosures, as well as surrounding properties value’s declining. Holmes said that just because your neighbor is facing foreclosure, doesn’t mean you shouldn’t be worried too.
“Individuals on blocks who have fallen into foreclosure, eventually those neighbors are going to be effected also,” she said.
In Middlesex County alone, 1 in every 834 residential mortgages was in foreclosure.
Foreclosure auctions are held every Wednesday at 1:30 in downtown New Brunswick for foreclosed homes in Middlesex County. On average, 15-20 homes are sold at each auction. Investors and hopeful homeowners attend these auctions to get their hands on a great deal.
The majority of the homes are sold for, at the least, $100 back to the Plaintiff. But hopeful bidders come in with print outs of the list of homes, hoping to have the highest bid. In most cases, the buyer is getting a better deal than the homeowner did when they purchased the home.
A new poll released by Stockton University shows that more than 55 percent of New Jersey residents say their income isn’t enough to keep up with the costs of living in the state. So when will the foreclosure rate lower and how? Bonita Holmes says it’s going to be a process.
“I don’t think at this time that the foreclosure rate will improve in NJ as fast as the rest of the country,” she said. “Some reasons for that may be the economy, in most cases the individuals income is far behind the cost of living in New Jersey. If the lenders would recast these loans to the fair market value of the home I believe most would be able to resume payments.”