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New Jersey Foreclosure Rates Increase, But More Options for Borrowers

Foreclosure is a legal proceeding in which the lender takes possession of and sells a mortgaged property when the borrower does not meet his or her contractual obligations –fails to pay their mortgage. Help is available for homeowners, but scammers often try to take advantage of the situation.

Many New Jersey communities continue to face some of the highest foreclosure rates in the country. Not only that, but according to various reports the rate of foreclosure in many New Jersey locations has risen steadily since the beginning of the year. It remains unclear if the recent rise in foreclosure filings is a temporary blip or a sign of a more prolonged spate of foreclosures in the area. Whatever the case, more and more local residents are learning about the proceedings and likely beginning to wonder what they should do in response.

It is crucial for borrowers facing foreclosure to understand the full scope of options available to them. Homeowners seeking counsel on these issues should be careful not to fall for traps by scammers taking advantage of rising foreclosure rates and the stress it places on families. Only experienced professionals should be sought out on these issues.

New law to protect homeowners from consultant scams

Consultant scams are popular in New Jersey. Distressed homeowners seeking counsel have been trapped with “counselors” promising to raise their credit rating or change the terms of their mortgage agreement all for blistering high fees which still result in negative consequences, including loss of ownership of their properties. Last year alone the New Jersey Attorney General’s office recovered over $17 million in settlements following scam claims made by local residents. The New Jersey Consumer Affairs has also cited more than 65 companies for loan modification scams, collecting about $380,000 in penalties.

These legal issues are tricky, and it is often hard for local residents to understand when they are being swindled by one seeking to help them out of a tough situation. Hopefully new legal measures will help weed out some of these hucksters. For example, last year Governor Chris Christie signed the Foreclosure Rescue Fraud Prevention Act. The law seeks to ensure that consultants and distressed property purchasers follow certain guidelines in order to protect homeowners from scams and fraud.

Accountability is at the heart of the measure. The law requires consultants to be licensed by the state Department of Banking and Insurance. The foreclosure “consultants” are also prohibited from charging excessive rates, and they cannot collect any fee until completing the terms of their written contract with the homeowner. They must post a bond with the state before conducting business, and are subject to a $10,000 fine for the first offense and $20,000 for each subsequent offense of the law.

While these new rules may cut down on the number of unscrupulous consultants, it may not deter the most egregious offenders. For that reason, it is still incumbent upon homeowners to ensure all those with whom they work on these issues offer professional, quality services. If you are a borrower facing foreclosure of your property and seeking counsel, do not hesitate to contact our Burlington County foreclosure lawyer to ensure comprehensive legal representation.