‘Willing to Work With Borrowers’: Herrick’s NJ-Based Practice Co-Chair Eyes Foreclosure Landscape
Herrick partner and co-chair of the firm’s Real Estate Litigation & Dispute Resolution Practice Group, Scott Tross, was recently featured in a Q&A with the New Jersey Law Journal discussing the impact of COVID-19 on commercial foreclosures and the outlook for 2021. Scott provided the below responses to the Law Journal’s questions.
Other than retail, in what sectors do you anticipate substantial foreclosure activity in 2021?
Retail and hotels are currently the two leading sectors in the commercial foreclosure space. The pandemic has devastated both sectors, and there will be borrowers in those areas who are simply not well capitalized enough to survive. On the residential side, there will be some foreclosure activity involving people who have lost their jobs. However, I expect the activity in that arena to be modest if unemployment falls in 2021, as many expect that it will. By and large, lenders have been willing to work with their borrowers.
The New Jersey judiciary recently issued an order concerning commercial foreclosures. What impact do you think that order will have on foreclosures?
I think that the court’s recent order will certainly facilitate the completion of commercial foreclosure proceedings. But it will not necessarily result in business as usual. Many of the county sheriffs have been reluctant to hold foreclosure sales during the pandemic. That will need to end in order for normalcy to resume. As conditions improve, I think you will see more and more sheriffs holding foreclosure sales. The court’s order is certainly a signal to the sheriffs that we should be moving in that direction, at least with respect to commercial sales.
In what ways has foreclosure practice changed during the pandemic? Do you think any of the changes will become permanent?
Apart from the temporary pause in completing foreclosure actions occasioned by the pandemic, there have not been any significant changes in foreclosure practice per se. However, foreclosure practice has benefitted from the willingness of judges to conduct virtual proceedings. That experience has by and large been successful. So I think that you will see judges continuing to conduct virtual proceedings after the pandemic subsides, if the parties so desire. The prevalence of virtual proceedings going forward remains to be seen.
Read the full article in the New Jersey Law Journal here. Access may require a subscription.