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Lenders and loan servicers continue to foreclose on commercial properties in New Jersey at the same pace as last year, a sign of continuing financial distress, according to second-quarter state foreclosure data.
There were 754 commercial foreclosures filed in New Jersey in the first six months of this year, roughly half of the 1,471 such actions in the state in all of 2009. New Jersey tracked just 173 commercial foreclosures in 2006, the year before the recession officially began.
Among the properties that lenders and loan servicers went to court to seize in the second quarter were: an office building in Maywood; a onetime child-care center in Closter; and a former lumber company in Hackensack.
Scott Tross, an attorney who represents lenders and loan servicers at the firm Herrick Feinstein LLP, expects what he calls a "wave" of commercial foreclosures to continue for at least two years.
"We're probably in the middle of it," he said.
"The economy's going to have to get better," he added. "The banking system is going to have to heal, and it's going to take a while."
Owners of office buildings, shopping centers and apartment buildings will continue to have difficulty paying their commercial mortgages if business and residential tenants can't pay their rent because of their own financial worries, he said.
Some borrowers continue to have trouble refinancing commercial mortgages made during boom years of five to seven years ago because of declining property values. Commercial mortgages, unlike residential mortgages, typically require refinancing within shorter terms, such as five to seven years.
"They can't refinance in many cases because nobody will make them the loan," Tross said.
Relatively high rates of commercial foreclosures may reflect added attention from regulators, who have prodded banks to reduce their exposure to the troubled sector of the economy, said Nicholas Ketcha, executive managing director of FinPro Inc., a bank consulting firm in Liberty Corner.
"There's regulatory pressure for them to accurately reflect on their books what is the condition of the loans that are there," Ketcha said. "Once you do that, and you're recognizing the loss of the loans, you're going to move forward" to foreclose.
While foreclosures in New Jersey can take two years to conclude, the cases do not always end with lenders becoming landlords.
TD Bank, for example, foreclosed on the former home of Fairmount Coal and Lumber Co. at 60 Burlews Court in Hackensack in April. But the delinquent borrower sold the building while in foreclosure, said the bank's attorney, Bill Fiore of the firm Meyner and Landis LLP in Newark.
Gerber RV Truck & Bus Inc. paid $1.8 million for the nearly 29,000-square-foot building in early July and plans to move in this fall, said Scott Gerber, the business owner's son.
Fiore said he moved to dismiss the foreclosure as the sale proceeds satisfied the mortgage.
"It worked out the way it should," he said.
BY ANDREW TANGEL
Keywords: loan servicers, commercial foreclosures, lenders, commercial mortgages, foreclosed, residential mortgages
I’ll keep this particular piece of bad news relatively short: Lender Processing Services reports that mortgage delinquencies were up fairly substantially last week. Mortgage delinquencies in May increased to 9.2 percent, up 2.3 percent from the April. This is also a 7.9 percent increase from the previous year.
Going a little further, the nationwide foreclosure rate is 3.2 percent, meaning that more than 12 percent of mortgages are delinquent or in foreclosure. Florida and Nevada lead the nation in non-current mortgage loans, with 22.4 percent and 21.8 percent respectively.
Additionally, the number of delinquent loans that are “cured” (become current) is declining, meaning that fewer and fewer people who become delinquent on their mortgages are able to catch up on payments.
None of this bodes particularly well for the future of the economy or the housing market. Further home price declines could certainly contribute to additional foreclosures.
Keywords: foreclosure, mortgage loans, mortgage delinquencies, housing market, Lenders
The $155 million federally funded state foreclosure help program announced Wednesday by Gov. Jennifer Granholm offers at least one component other such programs don't.
"What we like about this new Michigan program is, it has a provision built into it to support families whose sole source of income right now is unemployment," said Dave Jacobs, executive director of the nonprofit group Home Repair Services, in Grand Rapids.
The organization sees five new foreclosure counseling clients a day, Jacobs said. "This problem is not over yet."
The Helping Hardest-Hit Homeowners Fund isn't targeted at those already in foreclosure, but it could help up to 17,000 Michigan homeowners -- including up 11,000 unemployed homeowners -- avoid foreclosure, according to a statement from the governor's office. The state is one of five states to win federal funding for such a program.
Some programs run directly by the federal government have been backing away from supporting families who have only unemployment benefits for income, Jacobs said.
But more than 57 percent of delinquent mortgages nationwide can be traced to job loss, according to the Michigan State Housing Development Authority.
One concern: unemployment is a temporary source of funds and when it runs out, homeowners will be back in trouble.
When 24 Hour News 8 asked a state housing development spokeswoman how the state planned to address that issue, she said like unemployment, the new fund is designed as a short-term measure.
Aside from the unemployed, the two other eligible groups are those who have fallen behind on payments due to a temporary layoff or medical emergency and those who can't afford their payments because of lower income.
Retiree Robert Allen hopes he will land in one of the groups.
"It frustrates me for the simple reason [that] I know I can't fix it," he said. "And I want to fix it. So, I want someone to help me get it fixed."
Allen and his wife Janet have lived in the same home tucked away in a northeast Grand Rapids neighborhood since 1995. Their medical bills have piled up -- and Janet Allen's part-time cleaning service has seen a significant drop in business.
The two said they have tried to get a mortgage modification without success.
"I know that if we can get some help and get the mortgage straightened out, and get the taxes paid and the insurance thing going like it's supposed to, with what I make we don't have to worry," Robert Allen said.
Mortgage servicers have to decide whether to participate in the state program. The state expects to receive its first applications from servicers July 12.
Keywords: foreclosure, Homeowners, unemployment, mortgages, housing market, mortgage modification, mortgage servicers
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