More than four years after the Great Recession began, tens of thousands of New Jersey residents are still facing foreclosure.
These days, though, it’s taking longer than ever to complete a New Jersey mortgage foreclosure. On average, it now takes an average of 30 months for the bank to force mortgage holders from their homes.
Much of the delay can be attributed the robo-signing scandal of 2010, in which it was discovered that lenders were hastily processing foreclosures without actually reviewing any of the documentation. New Jersey foreclosures dropped 80 percent in the wake of the scandal.
Although foreclosure certainly brings difficulties, many borrowers are finding an unexpected benefit from the delay – they are able to live in their homes rent- and mortgage-free. Some New Jersey homeowners have been able to stay in their homes for several years before being kicked out by the bank.
This grace period can be an enormous boon to homeowners who have lost their jobs or are otherwise overwhelmed by mounting debts. Many are using the money they would have spent on their mortgage payments to pay off other debts or to save up enough cash for a deposit on a rental unit.
Bankruptcy Can Stop Foreclosure
It is important for New Jersey homeowners to realize that foreclosure can be stopped, even if the lender is unwilling to negotiate or refinance.
A Chapter 13 bankruptcy can stop foreclosure while allowing borrowers to keep their homes. In Chapter 13, the court will order a structured payment plan that will allow mortgage holders to pay off their missed payments.
In Chapter 7 bankruptcy, the mortgage debt is often completely discharged. Although the borrower usually does not get to keep the home, bankruptcy can sometimes be a better solution than foreclosure, especially if there are other debts involved.
If you are struggling with your mortgage, make sure to evaluate all your options before you move into foreclosure.
Source: The Record, “Homeowners in Limbo as Mortgages Go Unpaid, Foreclosures Drag On,” Kathleen Lynn, Jan. 30, 2012.