The chief justice of New Jersey’s supreme court passed down a ruling late last year that effectively halted foreclosure proceedings in the state, and now lenders are waiting to file tens of thousands of cases against homeowners, according to a report from the Newark Star-Ledger. Foreclosure filings have slipped 86 percent on a year-over-year basis in the first five months of 2011, but data from LPS Applied Analytics indicates that lenders have 28,500 foreclosure cases ready to be filed, with another 55,000 borrowers 90 days or more behind on payments.
The halt was first initiated as a result of the so-called robosigning controversy in which lenders approved thousands of foreclosure actions against consumers without properly reviewing the cases, and will be in effect until a report on the scandal is completed, the report said. But when it is, bankers will be ready.
“There are going to be very substantial numbers of foreclosures that are going to hit the market, all of which is problematic and obviously has a negative impact on housing values,” Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, told the newspaper.
Millions of consumers nationwide lost their homes to the robosigning practices of major lenders, and many briefly halted foreclosure actions for a short period after the scandal was discovered.
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