Foreclosure News / Hedge Funds / Eminent Domain Lenders in New Jersey are pushing cases through more quickly and it now takes about two months to process final judgments against delinquent homeowners, compared with a backup of nine months a few years ago, said Kevin Wolfe, assistant director of the Civil Practice Division in the Administrative Office of the Courts. The Office of Foreclosure, which reviews case files before they can move to the final step of sheriff sale, has added four permanent staff members, six law clerks and 10 case analysts since 2012. It previously had seven employees. “We are staffed up to move these cases faster,” Wolfe said. “But the other reason cases are moving more quickly is that lenders have improved their foreclosure practices and worked out logistics with their law firms and, as a result, they’re geared up to handle foreclosures more efficiently.” Private-equity firms such as Blackstone Group LP (BX) -- which helped drive up prices by buying thousands of single-family homes to rent in Arizona, Nevada, California and Florida -- have steered clear of the Northeast. Large investors favor markets with newer construction and demographic growth rather than the Northeast’s aging homes and higher property taxes, said Sam Khater, senior economist for CoreLogic. Hedge Funds Some hedge-fund investors are instead purchasing delinquent mortgages in the New York and New Jersey area. They are discounted because of the legal delays, said Jeff Taylor, managing partner at Digital Risk, a mortgage-risk analytics firm. The investor strategy is to avoid court delays by modifying loans, and if that’s not feasible, to pay homeowners to handover keys or sell for less than what’s owed, Taylor said. That may help flush out the pipeline of delinquencies. “The sooner that this inventory that has been pent up gets to the market place the quicker you’re going to see more home price appreciation,” Taylor said. “It gets the overall real estate market healthier quicker.” Housing inventory remains tight in the U.S., with a 4.6 month supply in December, according to the National Association of Realtors. New Jersey had a 6.6 month supply, the New Jersey Association of Realtors data show. A six-month inventory is considered equilibrium between buyers and sellers. Urban Areas While investors may help the market, they are generally avoiding hard-hit neighborhoods in cities such as New Jersey’s Newark, Irvington, Elizabeth, Trenton and Camden, according to Jeffrey G. Otteau, president of Otteau Valuation Inc. in East Brunswick. About 21 percent of New Jersey foreclosures are in urban areas and another 18 percent are in towns hit by Sandy. Only 4 percent are in the southern suburbs and 2.5 percent in the northern ones, Otteau said. “There is a crisis, and where that crisis will play out is in inner, urban neighborhoods where unemployment is highest, credit scores are lowest and investor appetite is non-existent,” Otteau said. Eminent Domain Newark, the state’s most populous city, and nearby Irvington are considering plans to use government power to seize underwater mortgages to help homeowners reduce debt and avoid foreclosure. The cities are researching a program that would offer fair-market value for the loans and reissue them to homeowners who can afford to keep making payments at the lowered amount. Many largely black and Hispanic communities in New Jersey and elsewhere were targeted for predatory loans during the boom, said Linda E. Fisher, law professor at Seton Hall University, who is helping the cities research the eminent domain proposal. Fisher is also campaigning with residents on her block in the town of Montclair to encourage the bank, which owns a vacant property two doors down from her, to clean it up and resell it. The house, which has been empty for three years, was stripped of pipes. It attracted squatters who moved in a stove and a flat screen television, she said. Montclair, home of comedian Stephen Colbert, is a leafy commuter town with hundreds of shops and restaurants accessible by foot. “Here we are in our middle- and upper-middle-class community and we’re seeing the same problem of poor maintenance by servicers,” Fisher said. “The foreclosure crisis has had ripple effects and it is not limited to poor communities of color where it’s concentrated.” \\Source: Bloomberg 2014
Posted on: Fri, 02 Jan 2015 03:12:51 +0000
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