The Times, Trenton

The Housing Crisis Deepens

Number of owners facing foreclosure keeps climbing

The Times of Trenton — Wednesday, October 15, 2008


Even as the presidential candidates offer competing anti-foreclosure plans and the state Legislature works to help people stay in their homes, the housing crisis continues to worsen in Mercer County.

Sheriff sales listings fill newspaper classifieds sections as banks and mortgage companies try, often with little success, to unload homes whose owners have fallen behind on their mortgage payments.

From July through September, the Mercer County Sheriff's Office received 151 foreclosure documents, each of which provides a Superior Court judge's authorization for a home sale to proceed, chief clerk Deborah Maloney said.

That's more than a 40 percent jump over the same three-month period in 2007, when the sheriff received 107 documents.

To date this year the sheriff received 422 foreclosure documents, up 19 percent from the same period last year.

"You get some people who are genuinely sad," Maloney said. "It's a medical thing, or you get people who don't even know what's going on."

For some homeowners who have been trying to make payments, a judge will postpone a sale. Of the houses that do go to auction, most have no bidders and simply become the lender's property, Maloney said.

"Things have not been selling for a quite a while now," she said.

The Mercer County Clerk's Office also receives initial foreclosure notices, each of which lists one or more houses potentially facing repossession.

The number of notices, which provides a rough indicator of foreclosure trends, has been creeping higher in the last two years and surged to 231 last month, compared to 145 in September 2007.

So far this year the clerk has received 1,611 foreclosure notices, a 43 percent increase from the first nine months of 2007. Many of these initial foreclosure notices do not lead to actual sheriff's sales.

The foreclosure crisis of recent years was caused by increasing defaults by homebuyers who took on more expensive mortgages than they could afford, in particular adjustable rate mortgages that reset to higher monthly payments after initially starting lower.

Homeowners facing foreclosure have several options, said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a Newark nonprofit that has an office in Trenton.

Some talk to their lender and try to renegotiate their loan to make the payments more affordable, preferably with help from a counselor from NJCA or another organization, she said.

Other homeowners are taking advantage of newly instituted government assistance programs, but the programs have strict eligibility requirements.

"There is help for more people, but the help is not all that it's cracked up to be," Salowe-Kaye said.

For example, this month the federal Hope for Homeowners (H4H) program went into effect, allowing people to refinance their homes with a new 30-year fixed-rate mortgage insured by the Federal Housing Administration.

But the homeowner's original lender must agree to participate, and people with second mortgages are not eligible, barring many would-be applicants, Salowe-Kaye said.

The New Jersey Housing and Mortgage Finance Program also has a mortgage assistance program, but Salowe-Kaye said her organization has had several clients who were not eligible because they own two-family homes.

In another new option, nonprofit organizations are using private bank funding to buy homes from beleaguered residents, then renting the homes to them with the goal of eventually selling them back their houses.

The Housing Assistance and Recovery Program, or HARP, has operated in several counties since May and the First Baptist Lighthouse Church in Trenton announced earlier this month that it would bring it to Mercer County.

Salowe-Kaye said the Department of Community Affairs would have a briefing today to outline plans for government funding for the nonprofit purchase effort.

The state Legislature is considering additional legislation to help homeowners, including two bills co-sponsored by Assemblywoman Bonnie Watson Coleman, D-Ewing.

One bill, A2517, would impose a new $2,000 fee on creditors who initiate a foreclosure, and use the money to pay for counselors and legal assistance for homeowners.

"There will be a real incentive for the mortgage services to renegotiate loans," rather than pay the fee, Salowe-Kaye said. "That bill will address a lot of issues."

The other bill, A3293, would exempt nonprofits that buy homes facing foreclosures from having to pay realty transfer fees.

At the national level, presidential candidates Sen. John McCain and Sen. Barack Obama have proposed homeowner relief tied to the recently approved $700 billion bank bailout.

McCain would spend $300 billion to buy troubled mortgages and replaced them with federally backed fixed-rate loans. Obama on Monday proposed a 90-day moratorium on foreclosures by banks participating in the bailout.

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