New Data: New Jersey Foreclosures Up in May 2012; Increased Short Sales Predicted
New data released last week shows that New Jersey foreclosure proceedings are on the rise. There was an 86% increase in foreclosure “activity” in May of this year compared with May 2011. The data is provided by the national market-group RealtyTrac. Foreclosure activity is defined in the data as any step in the process, from the bank’s first notice to a homeowner to the sale of a property at auction.
The trend in May is nothing new, as foreclosure activity increased each month this year, suggesting that banks and mortgage servicers are stepping up efforts to address payments issues.
Separate information from the Mortgage Bankers Association puts the new information into perspective. The group found that nearly 17% of all homeowners in New Jersey were struggling with their mortgage–either behind on payments or in foreclosure. This places the state well above the national average of 12.5%.
What does this mean for New Jersey homeowners?
Importantly, the data suggests that the vast majority of increased activity came in the form of foreclosure initiations. This is the first stage of the process, where the lender is just beginning to take action against those they believe failed to pay appropriately. However, receiving a foreclosure notice from the bank does not automatically mean that you have no options–even if your financial situation makes it difficult to keep up with payments. In fact, data suggests that about one half of the homes entering foreclosure will end up being repossessed by the banks.
What happens to the others?
Alternative arrangements are worked out. A short sale is one of the most common alternatives. Of course every individual borrower is in a slightly different position. Whether or not an option like a short sale is appropriate in your case hinges on many factors, including the total amount owed on your mortgage, other debts, current income, and similar details. However, regional and national trends often influence what lenders–particular the largest lenders–decide to do in each case.
At the end of the day, banks are interested in lowering their expenses and maximizing their profit. Foreclosures are costly for these institutions, which is why they are often willing to explore alternative arrangements which are more efficient and avoid the bank owning property. This is particularly true when there is an influx of foreclosure proceedings. Instead of getting mired down in costly and timely foreclosure proceedings in thousands of cases, lenders may be eager to work with homeowners on mutually beneficial arrangements. That includes short sales where a third party buys the home for less than what is owed and debt is forgiven.
Interestingly, even though foreclosure filings increased in recent months, total bank repossessions have decreased. This is further evidence of lenders growing eagerness to deal with these situations without fully completing a foreclosure. Nationwide, short sales rose by 25% in May 2012 compared with May 2011. They are now at a three-year high.
If you are in Moorestown, Burlington County, or throughout New Jersey, consider giving our New Jersey short sale lawyer a call to see how we can help in your case. Please do not forget, time is of the essence with many of these real estate matters. Receiving a foreclosure notice in the mail can be frightening. However, the earlier you act to check on your options, the greater the chance that alternatives can be worked out to get you back on the right track.