The housing crisis may be over, but that has not stemmed the flow of foreclosures around the country and in New Jersey. Numerous homes are still not worth what their owners owe on them. An estimated 2.3 million homes are still in danger of foreclosure, and many of their owners may be contemplating bankruptcy protection in the aftermath of the recession.
There is evidence that foreclosures in New Jersey are beginning to drop. Of course, some of that drop may be due to lenders halting foreclosures after Hurricane Sandy. However, there are still many homeowners that are still struggling with delinquent mortgage debt and are still in danger of foreclosure.
Singer R. Kelly has now joined a host of celebrities who have not been able to escape the impact of the recession. Like many homeowners here in New Jersey, he was unable to stop foreclosure of his reportedly $5 million home in the windy city. His lender, J.P. Morgan Chase purchased the home at auction for $950,000.
New Jersey residents may need to be aware of yet another consequence of the proliferation of foreclosures that have been processed since the housing bubble burst. There are many homeowners in New Jersey that believe their foreclosures are complete and they are no longer responsible for any debt associated with their prior home. Unfortunately, some lenders failed to complete the foreclosure process in a manner that causes the homeowner to remain liable for the property.
Lender Processing Services and a couple of its subsidiaries have admitted in a multi-state settlement that mortgage foreclosure documents contain false signatures and those documents were falsely notarized. As a part of the settlement, the company and its subsidiaries are banned from participating in these types of "shoddy practices" when conducting foreclosures. New Jersey will receive approximately $3.1 million of the $127 million settlement, and this may help some people stop foreclosure.
Hurricane Sandy ripped through New Jersey months ago, but the damage done is still being discovered. Recent reports have indicated that mortgage delinquencies have risen in areas hit by the hurricane. The financial losses suffered by many in our state may lead to a surge in bankruptcy filings if homeowners are unable to recover from Hurricane Sandy's aftermath.
As if to add insult to injury, Hurricane Sandy has further devastated the New Jersey housing market. Homeowners that were struggling with housing debt before the hurricane may be suffering even more than they were before. Many families no longer have a habitable home, if any at all, to return to after the storm.
It appears that Americans are paying less on mortgages, credit cards, and other loans. New Jersey residents who are still facing foreclosure and bankruptcy may not agree, but overall, it appears that families are getting back on their financial feet. The question then becomes whether or not people are willing to start spending again.
When New Jersey was identified as one of 17 states that was hardest hit by the housing crisis, the federal government's Troubled Asset Relief Program gave New Jersey approximately $300 million to help people keep their homes. The program was slow in starting, but now expects to help approximately 1,000 people stop foreclosure from happening to them.