HAMILTON TOWNSHIP — A Mays Landing courtroom was scattered with a few builders, a few businessmen and one curious spectator in the second row just there to watch on a recent Thursday.
A lot of money can change hands in a minute here. But more often, none does.
This is the end of the line for Atlantic County foreclosures.
Once a week in this courtroom, the Atlantic County Sheriff’s Office holds sheriff’s sales, public auctions for homes and businesses being sold “as is.”
Often, they don’t sell.
Sometimes nobody wants them, sometimes banks and lenders that held the mortgages set prices potential bidders consider too high.
Sheriff’s sales are occurring throughout South Jersey in increasing numbers.
They are a combination of the region’s economic struggles and the gradual unclogging of New Jersey’s foreclosure process that had halted for several years just after the recession over concerns of improper lender foreclosures, experts said.
But as of yet, they do not reflect thousands of job losses tied to Atlantic City casino closings last year, real estate professionals and officials involved with sheriff’s sales said.
“We don’t anticipate seeing them in a year or more. … These (properties now) are things that are a year and a half, two, three years old,” Sheriff Frank Balles said.
Balles said his office and others in the region are continuing efforts and services to help people facing foreclosure as another wave heads for the area.
Dozens of properties are sometimes listed in a week for sheriff’s sales in area counties, drawing builders and investors looking for a bargain.
Atlantic County had nearly double the sales listed in January than a year earlier.
But as builder Michael Marino, of Ventnor, found out, the lenders’ starting bid price can be too high to make it worth the risk.
Marino eyed a water-view lot on North Trenton Avenue in Atlantic City. He said it was a burned-out home, but the plot has potential for a new four-unit apartment building.
He would have spent up to $50,000 on it, he said. But its “upset price” — the starting bid — was $96,000.
“As a builder, you have to look at the carrying costs. If you get a property that could be valuable, if you can buy it right, you can put some money into it, prep it up and make it a real star. But you’ve got to buy it right,” he said.
Clearing the lot, hiring the architect and other costs could easily surpass $40,000 before a hammer hits its first nail, he said.
This was his first sheriff’s sale, but it may not be his last.
Atlantic County businessman Andy Simpson successfully bid $283,500 for a commercial property, a former realty office, next to commercial property he owns on Brigantine Boulevard in Brigantine.
“I think you have great opportunity especially when things turn around,” said Simpson, a Brigantine councilman who owns Bootleggers Liquor Outlet in Egg Harbor Township. “That property I just bought, I know the ground went for $300,000. Back in the day, too, not in the height of the market,” he said.
Simpson had expected other bidders and was prepared to spend more, but he was the only one.
More properties, more coming
The amount of distressed real estate is expected to increase as unemployed workers who lost jobs in 2014 fall behind on mortgage payments — and as the state’s six months of unemployment benefits run out.
Employment in Atlantic County dropped 8,400 from December 2013 to 126,100 in December 2014, according to seasonally adjusted figures from the Federal Reserve Bank of Philadelphia.
Area economies in South Jersey had lost thousands of jobs before 2014.
Daren Blomquist, vice president of market research firm RealtyTrac, said what’s happening in South Jersey is happening in New Jersey as a whole, only more so.
In one year, 2014, foreclosure filings in Atlantic, Cape May, Cumberland and Ocean counties rose 94 percent, 85 percent, 97 percent and 79 percent, respectively, California-based RealtyTrac says.
This includes initial filings, notices of sale and bank repossession.
The state average increased 70 percent. Nationally it dropped 18 percent.
But Blomquist expects foreclosure activity in the area to rise from job losses last year.
“We haven’t seen the full impact of those on the foreclosure numbers yet, and, yes, unfortunately that means it’s probably going to get worse before it gets better,” he said.
Foreclosures take a long time in New Jersey, a judicial foreclosure state, where it takes more than 1,000 days, second only to Hawaii, Blomquist said.
Short sales in Atlantic County represented 11 percent of all sales from January to October 2014, Blomquist said, an increase of 2 percentage points from that period a year ago. In a short sale, the lender agrees to retire the mortgage for an amount less than the principal still owed.
Blomquist said such data may indicate banks are more willing to work with short sales in harder-hit real estate markets.
Edward “Augie” Augsberger, a certified distressed property agent with Weichert Realtors Coastal with an office in Wildwood, said lenders are ramping up and taking possession of more properties.
“You’ve got some people who are trying to hang in there and probably going to exhaust all their savings to keep the house afloat. Typically at some point they throw their hands up and let it happen,” he said.
For Augsberger, who sells properties owned by banks, the homes often face issues from sitting vacant — stolen copper, water damage, even mold.
In Cape May County, Augsberger said, buyers jump on distressed properties when there are good deals.
In Atlantic County, some investors seem more tentative, he said.
He sold about 40 properties last year. He expects he’ll more than double that in 2015.
Help for homeowners
Every foreclosed home on the market is a home that someone lived in.
Corretta Stringfield is a credit and housing counselor with Philadelphia-based Clarifi, a nonprofit consumer credit counseling service with an office in Galloway Township.
She keeps a box of tissues near her desk.
Sometimes, a pile of unopened bank letters are dropped on her desk from homeowners too scared to open them.
This, Stringfield said, is a big mistake.
“If you miss a payment of $1,500 after one month it’s one thing, but then another month? And you have a reduction in your hours —who has that kind of money?” she said.
Stringfield says her job is to give people information, not make decisions for them.
Sometimes there are ways to work with lenders to reduce mortgage payments in the short term. Sometimes people can get loan modifications, or short sales are possible.
And sometimes, a realistic option could be they leave the house.
Some lenders offer “cash for keys” programs, offering relocation money for homeowners to leave.
This program has not been as popular in South Jersey as elsewhere, but Stringfield expects that may change as more properties become distressed.
In the meantime, she keeps a supply of tissues and offers her services as a housing counselor — and a shoulder to cry on.
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