Like other New Jerseyans, Frank Napolitano came late to the state’s foreclosure crisis.
“I really didn’t know what to expect when I got here,” the Bloomfield man said, as he looked down a long, brightly lit corridor in Faith Fellowship Ministries’ Sayreville megachurch. “I’ve never been through this before.”
“This” was welter of activity in rooms all around, as 600 people with troubled mortgages met with their lenders, servicers, representatives of state and federal agencies, and nonprofit housing counselors, trying for solutions.
Across much of the nation, conditions have improved in recent years since the bursting of the housing bubble and near-collapse of financial institutions left millions unemployed, homeless, or both.
While 46 states saw unemployment decrease last year, and drop again in early 2013, New Jersey headed in the opposite direction, according to the U.S. Bureau of Labor Statistics
Even as some of most devastated housing markets, like Las Vegas and Phoenix, began to show signs of life, foreclosures shot upward in New Jersey after a lull. The state has the second highest foreclosure rate in the country, behind Florida, and the gap is shrinking.
The links between New Jersey’s lagging economy and struggling housing market are people like Napolitano and his wife Andrea. Even when the Great Recession struck, they kept their heads above water, expecting a turnaround.
“Then my wife lost her job last year, and since then, it’s been getting tougher to make ends meet,” Napolitano said.
Then the Napolitanos got word of some possible relief from an unexpected source, Bank of America. The big bank is in the midst of a charm offensive, reaching out to customers whose mortgages it holds or services in a series of events aimed at resolving some mortgage problems.
Over the weekend in Newark and Tuesday through Thursday in Wildwood, Bank of America scheduled its own customer meetings. Saturday, it joined 14 other banks, plus insurance companies, lawyers, counselors, and state agencies to reach even more people.
With a lot of opportunities for advice and negotiations, some customers were still on site well past the scheduled 4 p.m. close. But for organizers, that was a sign of success.
“When we started doing this in 2008, people were in and out in 20, 30 minutes,” said Brad Dwin, communications director for HopeNow, a nonprofit that provides “support and guidance” for homeowners. “Now, there’s more to discuss, more programs available for them.”
Since that time, the Obama Administration nudged banks into some foreclosure relief through efforts like its Home Affordable Modification Program. The federal government also gave "hardest-hit" states like New Jersey money intended for direct homeowner assistance, such as more than $300 million for the state's Homekeeper Program.
Meanwhile, charities have stepped up with more education and advocacy, such as the 18 church members who have become counselors certified by the U.S. Department of Housing and Urban Development. That base makes Faith Fellowship a logical entity for outreach events, organizers said.
There is another key factor. Even as new foreclosure cases are flooding into New Jersey courts, many lenders are making an effort to staunch the flow, according to Anthony Marchetta, executive director of the state Housing and Mortgage Finance Agency.
As recently as 2010, mortgage “servicers weren’t even willing to take these calls” to discuss loan modifications, Marchetta said on scene in Sayreville with HMFA employees.
While some banks participated under mild prodding in Obama Administration modification efforts, “most people got put into ‘trial modifications,’ but they never became permanent,” Marchetta said. Laura Pfister of Middletown was worried that was what she would face at the Sayreville session.
“Coming in, I was almost in tears, shaking like a leaf,” she said.
Indeed, her loan servicer, Sovereign Bank, did not send a representative. To the dismay of organizers trying to help those like Pfister with storm issues, neither did the Federal Emergency Management Agency.
Yet, she left with a smile on her face.
“I finally got the face-to-face that was the key for me,” Pfister said. In months of phone calls, she found, “you never get a person, you get a number.”
Her loan is owned by the Federal Home Loan Mortgage Corp., otherwise known as Freddy Mac. Such government-sponsored entities support most of the nation’s housing loans. Through a combination of bad judgment, bad luck, and backstopping banks, they also own many of the nonperforming loans.
But in this case, Pfister found the agency “wonderful, helpful, compassionate.” For the first time, she said, she feels optimistic about keeping her home.
“A lot of these people are walking in for the first time,” said the Rev. Clarence Bulluck, who oversaw the event for the church’s redevelopment corporation. Of the roughly 600 people sat down with lenders, insurers and/or agency representatives, the most hopeful sign was that about a third also got detailed individual counseling, either for help with their existing loans or advice for new housing purchases or rentals, he said.
Hurricane Sandy has added another challenge for housing advocates, and the Sayreville organizers, including NeighborWorks America, targeted storm victims along with those already in jeopardy of foreclosure, according to Bulluck. Finding rentals was already “very tough” in the area, before the storm, he said.
While they are all glass-half-full types, organizers of the various outreach sessions acknowledged they face challenges helping people on the edge keep their homes or safely land elsewhere.
“I don’t think any one of us can say that there’s an [optimistic] answer for everyone at the end of the day,” said Keith Getter of NeighborWorks, which is part of the federal Neighborhood Reinvestment Corp.
For some, giving up their homes through short sales or other measures may be the outcome, but that process still needs “efficiency and transparency,” he said.
“We understand there’s a need for assistance, and we’re bringing in as much and as many kinds of assistance as possible,” Bulluck said.
That is the same approach Bank of America has been taking on its own, in meetings with its mortgage customers that began in 2009, according to Roger Braggs, vice president for mortgage outreach at the Charlotte, NC, institution.
“We’re interested in helping borrowers maintain home ownership first and foremost,” Braggs said.
Even for those customers who seek help, Braggs acknowledged the available aid might not be enough. But there are fallback plans.
“For those people who cannot keep their homes, there still are alternatives to foreclose,” he said. “We can offer short sales with incentives,” as much as $20,000 to $30,000 in “transitional” aid to help them relocate, Braggs said.
For many of the bank’s New Jersey customers, keeping their homes is a tall order. Since 2009, Bank of America has filed more than 24,700 foreclosure cases in New Jersey, the most of any lender doing business in the state, according to records from the Administrative Office of the Courts.
That is one reason why the bank’s outreach team, which operates across the country, has returned to New Jersey after conducting similar sessions here as recently as last year.
“We go where the [foreclosure] heat is, where the [mortgage] delinquencies are,” he said.
In those terms New Jersey is hot again. After a sharp drought in foreclosures because of court reviews and pending decisions in 2011 and the first half of 2012, the Garden State has risen to 12th place in the latest map of foreclosure “heat” compiled by RealtyTrac, an Irvine, Calif., real-estate data firm.
The pace has picked up this year, with more than 6,700 new cases filed through February, and no signs of slackening this month. On Tuesday alone, lenders brought 238 new foreclosure actions. Bank of America filed cases against homes from Bergen to Gloucester counties.
The new cases cascade onto an already substantial pile. From 2009 onward, lenders have brought 175,606 foreclosures in New Jersey, and 96,375 of those cases are still active, according to state court records.
Still, Bank of America officials are hopeful their programs will restrain those numbers, with some reason. Since 2008, the bank has modified 35,838 mortgages in New Jersey, according to Rhena Wallace of Emanate, its public relations firm.
Of 353,500 mortgage customers here, 17 percent are in need of some form of help, according to Wallace. For the Newark event, the bank invited 12,000 customers within a 25-mile radius, though only a fraction attended.
For South Jersey, the bank is casting even a wider net, inviting 12,600 in 75-mile radius of the Wildwood Convention Center, where sessions will run 8 a.m. to 8 p.m. tomorrow through Thursday.
For those who have preregistered, bank employees will have files on hand. But participants should stillto make sure they have all required documents.
“We think there’s a need here at this time, obviously if we’re inviting 12,000 people,” he said.
Some of the process involves tough love.
Yasmin Peña, a housing counselor from Novadebt’s Freehold office, participated in both the Newark and Sayreville events. The problems customers presented were similar, with job losses and “mortgage relief” scams topping the list, she said. But whatever the underlying factors, Peña tells borrowers they must take responsibility.
“A lot of people try to put it all on the banks, high interest rates, or fraud or whatever,” Peña said. “But whatever happened, when you sign these [mortgage] documents, you’re making yourself responsible.”
While participating in the bank’s events is a small portion of the nonprofit agency’s mortgage work, she said it offers a chance to work through paperwork with customers before they discuss it with bank employees.
“It’s reassuring for people to be able to talk to a neutral third-party, who’s not employed by the bank,” she said.
Even more than other lenders, Bank of America has particular reason to offer alternatives to foreclosure. At last week’s New Jersey Future forum in New Brunswick, participants expressed sympathy for the tangled documentation underlying some of the bank’s foreclosure proceedings.
As the housing bubble began to burst, Bank of America bought the collapsing Countrywide Financial, whose reckless lending practices and shaky documentation turned out to be worse than anticipated.
In the pithy phrase of Jesse Eisinger of ProPublica, Bank of America acquired Countrywide “in the sense that one acquires Ebola virus.” But the bank quickly absorbed another albatross, Merrill Lynch, as its investment banking division.
“Whatever decisions were made several years ago, we’re here now to help people find solutions to their problems,” Braggs said.
After the close of business on the New York Stock Exchange yesterday, the Federal Reserve gave an expected bit of good news. The bank was one of 18 major institutions that again passed a Fed “stress test” of financial stability.