The long-expected second wave of foreclosures in states where courts delayed their processing appears to have begun in New Jersey and area counties, with filings jumping in the second quarter from a year ago.
Foreclosure filings in Atlantic County were up 80 percent from the second quarter last year. Increases were seen of 33 percent in Cape May County, 53 percent in Ocean County and 66 percent in the state overall, according to RealtyTrac.
New Jersey is among 22 states that make foreclosure a judicial process, and from 2010 to fall 2011, foreclosures were largely halted by the courts in response to reports of processing irregularities in this and other states.
Rick Cammarano, 55, a broker-associate with Century 21 Alliance in Wildwood Crest who handles a lot of foreclosures and other distressed properties, said the push to a new peak in foreclosures is just starting.
"I'm doing a lot of bank inspections for preforeclosures and short sales, 25 to 35 a week. That's probably double last year at this time," Cammarano said.
Such inspections indicate the number of people behind on their mortgage payments or headed for the foreclosure market in the next six months, he said.
"The foreclosure inventory is starting to increase a little bit. We're expecting a wave of foreclosures within the next six months, once the banks start to let loose the backlog they have," Cammarano said.
Foreclosures across America in the second quarter were actually down 8 percent, because the courts aren't involved in foreclosures in the majority of states and where they are, many courts are still restraining their processing, RealtyTrac said.
"Additional scrutiny on how lenders and servicers process foreclosures, along with aggressive foreclosure-prevention efforts by the federal government and several state governments, continue to keep a lid on the foreclosure problem at a national level," Brandon Moore, CEO of Irvine, Calif.-based RealtyTrac, said in a statement. "Lenders and servicers are slowly but surely catching up with the backlog of delinquent loans that under normal circumstances would have started the foreclosure process last year."
Cammarano and many others in the real estate industry believe that working through the inventory of distressed homes is the key to returning to a normal housing market.
"We have to go through this foreclosure market and once that happens, you'll see the home market come back," he said.
Richard J. Shaffer III, broker/owner of Resorts Ltd. agency in Egg Harbor Township and past president of the Atlantic City & County Board of Realtors, said it would be better to get the backlog of foreclosed properties into the market and get them sold.
"We will not see any substantial housing price increases until we can greatly reduce the inventory of these bank-owned properties," Shaffer said.
At times during the housing slump, distressed-property sales have accounted for more than 40 percent of overall home sales, putting tremendous downward pressure on home prices. That may happen again as foreclosures head for a second peak, probably next year.
"It will definitely put more pressure on prices," said Gregory Laubert, an agent with ReMax Atlantic. "I don't look at it as a positive, unless you're a buyer. If you're a seller, it's a negative."
Laubert, 48, of Mays Landing, said another disadvantage to the market is that homeowners displaced by foreclosure or short sales generally do not become buyers in the market but renters.
"So if 30 (percent) to 40 percent of those selling or losing a home are not subsequently buyers, that's really affecting the market," he said.
Shaffer said foreclosure sales won't help the economy as much as conventional home sales.
"I see the sale of the average homeowner as much more important to our economy than a bank sale," he said. "Though the banks will reinvest the funds they receive and those funds will eventually reach consumers, it's the sale of the individual homeowner that will have an immediate impact on the economy."
On the positive side, the second wave of foreclosures will provide the inventory that buyers - primarily investors - have been seeking the past year but finding scarce.
"Properties in the area are selling. People finally realize that the values aren't what they used to be, and buyers are realizing now's the time," Cammarano said.
"There are a lot of cash buyers now. Investors out there are just waiting."
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Area foreclosures jump
Atlantic CountyCape May CountyCumberland CountyOcean CountyNew JerseyNationSource: RealtyTrac