Foreclosure-Gate Reaches New Jersey

The foreclosure mess is really hitting home here in New Jersey, with the announcement that seven plaintiffs have filed a class-action suit in Newark against Bank of America and two of its subsidiaries. According to the suit, BofA has been foreclosing on homes in New Jersey when it had no right to begin the proceedings.

Among the specific claims brought in the suit:

* A homeowner took steps to get his mortgage modified and began making his reduced payments, but he was foreclosed on anyway.

* Another homeowner took the bank to binding arbitration and won his case - only to have the bank ignore the arbitrator's decision and foreclose anyway.

The end result of all this won't be an end to foreclosures in New Jersey, of course; it will only slow them down. The vast majority of foreclosures are on homes that legitimately should be foreclosed upon, even if it's not clear who has the authority to begin the proceedings. One positive aspect of all this, other than forcing the banks to get their own houses in order, might be to stretch out the pace of foreclosures, resulting in a more orderly number of homes going up for sale. That could have a small but positive effect on our overall housing market.