Even the Affluent Face Loss of Homes

Homeowners in the state facing mortgage foreclosures are heading in droves to law firms, state agencies and nonprofits for advice on how to save their homes or buy time before they hand over their keys. At the same time, lenders chasing delinquent borrowers are seeking legal advice and in some cases easing up terms.

Glenn Reiser, a partner in the law firm of LoFaro & Reiser LLP in Hackensack, says he is seeing “a tremendous increase” in the number of distressed homeowners calling in for what his trade calls “foreclosure mitigation services.” Reiser says the firm has been getting three to five such inquiries a week since March, compared with one or two a week in January and February.

New Jersey ranked 14th in the country in terms of home loans in foreclosure at the end of last year, with a total 1.275 million such loans, according to the National Delinquency Survey, released this month by the Mortgage Bankers Association in Washington, D.C. It said the number of foreclosures in the state rose from 1.87 percent of home loans to 2.31 percent last year.

Reiser says that mortgages in arrears for 90 days or more enter the foreclosure process when lenders file complaints with the state Office of Foreclosure in Trenton. Homeowners can pay off the delinquencies while the complaint winds its way through court proceedings. Homes that remain in arrears can be sold through the offices of local sheriffs.

Reiser says foreclosures are now hitting people across the income spectrum. “Typically, the average person facing a foreclosure is one who has a hard-luck story or somebody who has lost a job, got sick or has had a divorce,” he says. “But the type of client coming to us now is one I have never seen before—a two-income family earning in excess of $100,000 annually and with an extremely high mortgage debt service.”

Reiser says his current clients include a Bergen County couple with a combined annual income of more than $120,000, and two mortgages totaling $443,000 on a home with a current market value of $400,000. He says they are nine months behind on monthly payments of more than $3,900, and are trying to sell their home.

Other attorneys have similar stories to tell. “This crunch has hit a far broader spectrum of the population than ever before in my 39 years” as a lawyer, says James Aaron, a partner in the Ocean-based law firm of Ansell Zaro Grimm & Aaron and chair of its litigation, bankruptcy and municipal departments. Aaron says the firm’s volume of foreclosure mitigation work has risen 10-to-15 percent in recent months.

Aaron says large, publicly traded banks are more willing “to work out loans and renegotiate terms” than small private mortgage lenders. Thomas J. Hall, partner in the law firm of Hall & Hall in Lincroft, concurs: “Banks understand that sometimes it is better to take a smaller loss up front rather than go all the way to foreclosure and lose more, pay taxes, worry about vandalism, pipes freezing in the winter and maintaining the lawn.”

Hall says he has seen a 40 to 50 percent rise over the past two years in the volume of foreclosure-related business from the 15 large lenders that his firm represents. “They are always in a hurry to foreclose, but these days they show a little more tendency to listen to alternatives.”

For borrowers, seeking timely foreclosure-mitigation advice could mean the difference between losing and saving a home, says Marge Della Vecchia, executive director of the state’s Housing and Mortgage Finance Agency.

She says HMFA has spent $960,000 in the current fiscal year to train more than 40 counselors at counseling agencies around the state.

Della Vecchia says mitigation advice is also available from nonprofits like NeighborWorks America, a Washington, D.C.-based network of 230 community organizations. Meanwhile, the Homeownership Preservation Foundation in Minneapolis offers foreclosure counseling through the toll-free hotline (888) 995-HOPE.

At AHome Inc., a Millville-based nonprofit that is one of a dozen HMFA-certified counseling agencies, “We have a success rate of 90 percent if the borrowers come to us before they miss their second payment, or before 60 days,” says Executive Director Donna Turner. She says the agency dealt with nearly 100 borrowers last year, up from 67 in 2006 and just 17 in 2005.

These days, Turner says she has three or four new clients each week, or twice the volume of last year, and has had to hire another staff member to keep up with the work load.

E-mail to shankar_p@njbiz.com