Cranford Foreclosure Filings Increase in Third Quarter

While the housing market has certainly showed signs of recovery in our area, the fact remains that with unemployment at a 25-year high, many homeowners in our area are struggling to afford their monthly mortgage payment due to either job loss, income cuts,  mortgage payment increases due to interest rate "resets," or some other type of life hardship such as a family illness, which happen in any economy.

Although many local towns like Cranford have not experienced nearly the amount of foreclosures and "distressed" property sales as areas such as Las Vegas, South Florida, or California, the financial crisis has still had an effect on the local distressed property numbers.

Distressed properties include those homes that have already been foreclosed on by the banks, homes that are in the process of foreclosure, homes that are on the market for sale, but are worth less than their mortgage balance (short sales), or homes where the homeowner is already in default (30 days or more late on the mortgage) or will soon be in default (current now, but likely won't be for long).

Some of these numbers are harder to track, as the unfortunate reality is that as many as seven out of 10 homeowners that go into foreclosure have done so with no visible signs of intervention, such as listing the property for sale, or attempting to contact their mortgage lender. For this reason, these properties do not show up in the distressed property numbers until the lender has filed a public notice of default, or a public notice of foreclosure sale, or in some cases, until the home is sold at auction.

According to RealtyTrac, foreclosure filings in Cranford totaled 15 in the third quarter of this year, which is up from six in the first quarter. While this may not seem like a lot, it is an increase of two and a half times. Looking at the start of Q4, there were already eight foreclosure notices filed in the month of October, which may lead to an even higher 4th quarter number. 

The troubling fact about this statistic is that these are just the public notices that have been filed, and do not include homeowners who may be as much as 90-120 days in default on the mortgage, but have not received a public notice yet.

The positive part of this story is that Cranford, like its neighbors Westfield and Scotch Plains, still has an extremely low percentage of foreclosures compared to the New Jersey averages, and even the Union County averages. 

Nationwide, it is estimated that at least 10 percent of all mortgages are in default, so it is a fair assumption that there are still dozens of homeowners in Cranford who may not appear in these statistics, but who are still struggling to pay their mortgage every month and don't know what to do about it. As the economy and housing market stabilize, much like unemployment, the foreclosures and defaults may still continue to rise, even as the housing market improves with increased transactions.

It's important for local area homeowners who are having difficulty paying their mortgages know that there are other options besides foreclosure. In fact, foreclosure should be the last resort, as it is one of the most emotionally and financially devastating consequence, and it can be avoided. Many homeowners are not even aware that there are numerous ways which can help them avoid foreclosure, and in many cases help them keep their home. Some of these options include mortgage modification, forebearance, reinstatement, refinance, short sale, and deed in lieu of foreclosure.

While some of these may be viable options for distressed homeowners, it is critical for these individuals to receive good legal, real estate, and tax advice from qualified professionals in the area before making any decisions. In most cases, a licensed real estate agent with experience in distressed properties is an excellent first resource for not only information about possibly selling the property, but also as someone who has a trusted network of attorneys, CPA's, and lenders in their database ready to give the homeowner the advice that they need. Realtors who have earned the CDPE designation as Certified Distressed Property Experts, have some of the best training and experience on this subject, and more information about the CDPE designation can be found by clicking here.

Sean Carroll is Team Leader of "Team Carroll" at RE/MAX Classic Group, and can be reached via phone at 908-376-1569, by email at Sean@TeamCarrollNJ.com,  or via the web at www.TeamCarrollNJ.com.