They received a foreclosure notice in March 2010, which they challenged in court. In May 2011, the foreclosure action was withdrawn after the judge ordered a copy of the mortgage note, which wasn't produced, said Margret Brady, a retired house painter and former member of the town council.
Certified Letter
The Bradys heard nothing about their foreclosure until the certified letter from GMAC arrived. It said their monthly mortgage payment would be $6,336, about three times their previous bill.
"That's about $4,000 more a month than we've been putting aside," she said in a telephone interview from her home, a one- hour train ride from Manhattan.
Judicial states such as New Jersey provide automatic court review of home seizures, giving borrowers a legal forum to demand proof that lenders have the right to foreclose or to argue for mortgage modifications. The 21 judicial states --also including Florida, New York, Connecticut, Maryland and Pennsylvania -- have about 40 percent of the 42.5 million home loans tracked by the Mortgage Bankers Association.
By some estimates, the visible inventory of 2.4 million homes for sale nationwide is dwarfed by the hidden supply, which may number 5.7 million, according to a Morgan Stanley analysis. The U.S. shadow supply -- a combination of off-market bank-owned homes and properties forecast to be repossessed by lenders -- has decreased by a third from the peak in early 2010 as more homeowners have lost their houses or received a loan modification that allowed them to bring their mortgages current, Morgan Stanley said in a July 26 report.
Property Supply
The U.S. supply of properties listed for sale, a seasonally adjusted measure of how long it would take to sell off the inventory at the current sales pace, fell to 6.4 months in July from 9.3 months a year earlier, according to the National Association of Realtors. That helped push up the median sale price of an existing home by 9.4 percent from a year earlier to $187,300.
The logjam in New Jersey may be breaking following a February ruling in a case involving the state's Fair Foreclosure Act, which required lenders to furnish the name and address of the note holder on foreclosure notices, rather than just the contact information for a loan servicer. In July, lenders filed 2,387 foreclosure complaints in the state, more than twice as many as a year earlier and the most since December 2010, according to state court data.
Filing 'Glut'
Also in July, Wells Fargo & Co. requested permission to move forward with 4,000 stalled New Jersey cases. State courts have a new electronic filing system and are preparing to add dozens of new employees to handle the bigger caseload, according to Winnie Comfort, spokeswoman for New Jersey's court system.
"We are anticipating a glut in filings because that's what the lending community is telling us," Comfort said in a telephone interview. "We will do everything we can to move those in a timely fashion."