NJ Mortgage Lenders Concerned Over Seriously Delinquent Mortgage Holders
The Mortgage Bankers Association (MBA) said on Thursday that about one in every twelve mortgage lenders in New Jersey were involved in the foreclosure process during the third quarter of this year. The Association blamed high "robo-signing" by lenders for this backlog. According to recent reports, nearly 8% of mortgages stand in the foreclosure process in Garden State, as compared to an overall 4.4% countrywide. Additionally, approximately 3.5% mortgage holders in the country are seriously delinquent (mortgage holders who have missed on their loan payments for 90 days or more), while the figure in New Jersey stands at 3.8%. NJ mortgage lenders and housing counselors are of the opinion that the current scenario is to be blamed on loss of employment.
Phyllis Salowe-Kaye who works with NJ Citizen Action said that it was the present economy, unemployment and underemployment that is directly responsible for the delayed mortgage payments. He said that people were missing on their payments because their unemployment had run out. Notably, the NJ Citizen Action is the largest housing counselor in the state. The unemployment rate in the state was 9.1% in October, state labor officials said this Thursday.
Robo-signing – Is it Responsible?
The rate of foreclosure pipelining slowed dramatically during the last year, since state courts directed NJ mortgage lenders to show explicitly that legal documents required during mortgage loans were not being robo-signed. The term "robo-signing" refers to the process of merely going through the paperwork without ensuring its authenticity. However, mortgage lenders were allowed to file foreclosures again from August, but most of them are still reluctant to move forward. This is due to recent ruling by a state court that rejected a foreclosure filing, the reason being that the lender had not been properly identified. The state Supreme Court will be hearing that case on appeal.
The Association also said that data collected on a national scale in this third quarter of the year showed that the number of people missing on their mortgage payment had decreased, and this was a sign that fewer homeowners were troubled when it came to repayments. The NJ mortgage lenders said that they were already doing all they could to help the troubled homeowners. Sen. Christopher Dodd also recently called a "Homeownership Preservation Summit", wherein lenders agreed to assist borrowers in modifying terms of the loan before they switched to higher rates.
Dodd said he wanted the federal government to catch lenders who offered loans to borrowers without requiring them to set aside insurance payments and taxes. He also said that setting limits on loans given out without income verification (such loans are also dubbed as liar loans) would be helpful. In March this year, five federal agencies that are responsible for credit unions, banks and thrifts proposed a set of guidelines that required stricter evaluations of any consumer’s ability to repay, in addition to other recommendations. The guidelines that only apply to banks that are federally regulated are to be completed by the end of this month.