Sheriff’s Sales Increase as Housing Bust Continues

Larry Notch may have the most difficult job at the Cape May County Sheriff’s Office. The veteran investigator is in charge of serving court papers on homeowners who are so far in debt that they are at risk of losing their homes. And when all efforts fail to raise money or renegotiate a loan, Notch is the one who must evict the former homeowners and their possessions. Lately, he has been busier than ever.

“Can you imagine being in a home most of your life and having to leave because you got caught up in this situation?” he asked. Cape May County, with its thousands of resort properties, was in some ways insulated from the national mortgage crisis as investors waited in hopes of a quick market rebound. But like the rest of the nation before it, Cape May County is seeing a rise in foreclosures now. The county auctioned 280 properties last year, double the number in 2006 during the flush real estate market boom. So far this year, the county has sold 287, with five weeks to go.

The same phenomenon was seen across the region. Cumberland County has seen 453 sheriff sales so far this year. Ocean County has tallied 553 sales so far compared with 518 last year and 99 during the peak of the last real estate market boom in 2005. “We’re finding when we go to houses to post them, the owners have already walked out — just given up,” Ocean County Undersheriff Wayne Rupert said. “I think next year is going to be at least as bad as this year and maybe worse. It’s a shame, but these things are happening all over.”

Atlantic County launched a program a year ago to help cash-strapped residents stay in their homes. Stephan Jackson, chief of staff of the Atlantic County Sheriff’s Office, said many distressed homeowners were victimized by scam artists who promised unrealistic loan modifications or other fraudulent financial services that only worsened a family’s money troubles. So his office now provides contacts to legitimate agencies and government programs to help people retain their homes. So far this year, the county has begun foreclosure proceedings on 540 properties but sold just 30 at auction. “We’re sworn to protect and serve,” Jackson said. “If we can keep a neighborhood intact, if we can prevent homelessness, if we can keep boards from being put up and grass from growing three feet, if we can avoid the socio-economic stresses that go along with that — if that’s not law enforcement, I’m not sure what is.”

The recession is not helping matters locally. “We’re still seeing a majority of our foreclosures being caused by toxic mortgages. But in the past six months, we’re seeing foreclosures increasing because of a lack of a second job, the loss of a primary job, the loss of overtime or the loss of part-time work,” said Phyllis Salowe-Kaye, director for New Jersey Citizen Action. According to the public advocacy group, New Jersey has the second-highest percentage of subprime loans in foreclosure in the United States, second only to Florida. And Salowe-Kaye said foreclosures are expected to rise as more adjustable-rate mortgages create financial hardships for people already struggling in a recession. That may affect the resort communities in a much more major way. We don’t have the same tools available to help folks when the property is not their primary residence.

That’s where Notch comes in. It takes someone with discretion and tact to handle this difficult task, Cape May County Undersheriff Raymond D. Lewis said. “It’s a tough business,” Lewis said. “Most times when it gets to that point, they know it is coming. When he goes out, it’s no surprise to them.”

It will probably get worse. New Jersey Citizen Action predicts the peak of foreclosures could come as late as 2011, when interest rates shoot up in many adjustable-rate mortgages. Lenders call these “exploding mortgages.” “That was just based on the exploding mortgages that we know are coming due,” Salowe-Kaye said. “They are set to adjust mid-year of 2010. You’re just going to see a crazy expansion.” Notch said he, too, expects to see more foreclosures next year. He has seen more high-priced condominiums on the auction block, particularly in the investor-heavy Wildwoods. “Those are rental properties,” Notch said. “They bought them at a time when everyone was trying to turn them over for a buck. What happened was they could no longer afford to carry the mortgage. They just left the properties.” Those are the easy ones. Notch simply lets movers in to secure any unclaimed possessions to put in storage and then changes the locks. But sometimes he has to stand by as the homeowners make last-minute arrangements to secure their possessions and find a new place to stay.

“It’s not something we spring on them. We really try to help people out. When it comes down to the actual eviction we try to do it discreetly,” he said. For example, Notch dresses in plainclothes so as not to attract attention from nosy neighbors — it is embarrassing enough having to pack a lifetime’s possessions into cardboard boxes under the watchful eye of authorities. The owner of a $2 million Wildwood investment condo scheduled for a sheriff’s sale next month declined to be interviewed, citing the mortification she felt about the situation. “It’s embarrassing enough. But being evicted makes it worse,” Notch said. Notch, a retired State Police trooper, said his low-key demeanor helps soothe frayed nerves when he deals with despondent people on one of their worst days. “Usually it’s the way you treat people. If you treat them decently, you’ll find they’re pretty receptive,” he said. “A lot of people don’t show enough patience. You have to let people talk — let them get things off their chest.”

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