Trenton, NJ – January 9, 2009 – (RealEstateRama) – To reduce foreclosures and further assist New Jersey homeowners at risk of losing their homes, Governor Jon S. Corzine today signed the Mortgage Stabilization and Relief Act into law. The legislation, (S-1599/A3506), which is another component of the Governor’s Economic Assistance and Recovery Plan, establishes the Mortgage Stabilization Program and the Housing Assistance and Recovery Program. It also imposes additional requirements on lenders foreclosing on mortgages. The New Jersey Housing and Mortgage Finance Agency (HMFA) will be responsible for the administration of the two new programs.
“The magnitude of the foreclosure crisis has made many New Jerseyans feel that maintaining their dream of homeownership is beyond their control. It shouldn’t be,” said Governor Corzine. “The deep recession has caused some New Jerseyans to lose their jobs and their ability to pay their mortgages, creating the all-too-inevitable march toward foreclosure.
“We must have options for the sake of stabilizing the entire financial system as well as individual homeowners. The programs established through this bill signing, build upon the actions we have taken in partnership with the Legislature and reaffirm our commitment to keeping homeowners and their families in their homes where they belong.”
Through the Mortgage Stabilization Program, HMFA will promote modifying or refinancing of first mortgage loans in imminent danger of foreclosure to qualified homeowners by offering non-amortizing (no monthly payment) second mortgage loans. The State will provide a mortgage stabilization loan of up to $25,000 to match the lender’s contribution in an effort to bring the mortgage payment down to an amount that the borrower can afford. Both the State’s and lender’s assistance loans will be repaid by the homeowner upon sale of the property.
To qualify for assistance, a homeowner’s household income may not exceed 120 percent of the area median household income or the HMFA’s Mortgage Program income limits, which vary by County, but are as high as $135,380. The lender must agree to write the mortgage down to the current value of the home. Homeowners who accept program assistance are required to participate in agency approved household budget counseling sessions. Funding for the Mortgage Stabilization Program is appropriated at $25 million through Long Term Obligation and Capital Expenditure Fund.
“There are an increasing number of households that are becoming victims of foreclosures,” said Senator Ronald L. Rice, (D-Essex). “These foreclosures have created an economic downturn in New Jersey. When a home is foreclosed upon, it isn’t just families who are affected. We have seen, first hand, that the negative impact creates a domino effect that leads to an increase in crime and a decrease in area property values.”
A second program, the Housing Assistance and Recovery Program (HARP), will help homeowners who face imminent foreclosure stay in their home while paying affordable rent until the homeowner is able to buy back the property. HMFA will provide financial support through the Housing Assistance and Recovery Program Support Fund to certain nonprofit and public entities to execute lease-purchase agreements with existing homeowners who meet program requirements. $15 million from the Long Term Obligation and Capital Expenditure Fund is appropriated for the program.
“New Jersey’s deepening mortgage crisis makes it imperative that we provide direct assistance to ensure families can stay in their homes and out of foreclosure,” said Assembly Majority Leader Bonnie Watson Coleman (D-Mercer). “We need to open lines for borrowers and lenders to work together to preserve the dream of homeownership that is quickly becoming a nightmare for too many families.”
Following separate legislation that the Governor signed last month, the Administrative Office of the Courts will provide mediation services between the homeowner and the creditor to assist the parties with entering into an agreement that allows the borrower to remain in the home with an affordable monthly mortgage payment.
Other new requirements will prohibit consumer reporting agencies from selling credit inquiries from consumer mortgage loan applications to third party entities. It does not apply to third parties holding an existing mortgage loan on a property.
“As the number of New Jersey homeowners facing foreclosure increases, so must our vigilance to provide a means for these families to keep their homes,” said Assemblyman Jerry Green (D-Union).
The legislation also protects neighborhoods by requiring creditors who initiate foreclosure proceedings to notify municipalities where the foreclosed property is located. As a result, municipalities now have recourse against those creditors who fail to comply. In addition, the legislation supports a six-month forbearance period prohibiting creditors from taking steps to remove the borrower/homeowner from a property.
“The worsening mortgage crisis is forcing the state to navigate uncharted and increasingly turbulent waters,” said Assemblyman Ralph Caputo (D-Essex). “It would be a failure of leadership to sit idly by and let entire neighborhoods fall overboard.”
“Governor Corzine, with assistance from the Legislature, has taken a much needed step today in assisting New Jersey residents during these difficult times,” said Department of Community Affairs Commissioner Joseph Doria. “HMFA, under the leadership of Marge Della Vecchia, will continue its great work on foreclosure assistance and prevention through these programs.”
Primary sponsors of S-1599 were Senator Ronald L. Rice (D-Essex) and Senator Dana L. Redd (D-Camden, Gloucester).
In the Assembly, A-3506 sponsors included Assembly Majority Leader Bonnie Watson Coleman (D-Mercer), Assemblymen Jerry Green (D-Middlesex, Somerset, Union), Ralph R. Caputo (D-Essex), Ruben J. Ramos, Jr., (D-Hudson), Joseph Vas (D-Middlesex) and L. Harvey Smith (D-Hudson) and Assemblywomen Mila M. Jasey (D-Essex) and Nellie Pou (D-Bergen, Passaic).
For More Information:
Robert Corrales
Phone: 609-777-2600
