Initiative aimed at helping thousands of homeowners facing foreclosure
Trenton, NJ – January 9, 2009 – (RealEstateRama) – A new state-supported mortgage foreclosure mediation program is in place to help the thousands of New Jersey homeowners facing foreclosure throughout the state, Gov. Jon S. Corzine, Chief Justice Stuart Rabner and Attorney General Anne Milgram announced today.
The program is a joint effort of the Judiciary, the Office of the Attorney General, the Housing Mortgage Finance Agency in the Department of Community Affairs, the Public Advocate, the Department of Banking and Insurance, and Legal Services of New Jersey.
The foreclosure mediation program gives eligible homeowners access to housing counselors, attorneys and court-trained mediators who may help homeowners in foreclosure remain in their homes.
Gov. Corzine signed legislation in December supporting the program with $12.5 million in state funds. The Department of Community Affairs received $12 million in grant-in-aid funds, which will be used to train and pay for housing counselors and lawyers through the New Jersey Housing and Mortgage Finance Agency. Housing counselors certified by both HMFA and the U.S. Department of Housing and Urban Development are part of the program. The Judiciary received $500,000 to provide foreclosure mediator services to homeowners.
“A key to New Jersey’s economic recovery is assuring the stability of families, communities, and the neighborhood businesses that depend on them until this national recession subsides,” Governor Corzine said. “By creating a mechanism enabling distressed homeowners and borrowers to work out amicable solutions during these challenging times, we can stabilize the entire financial system and keep people in their homes.”
“The mortgage foreclosure crisis in New Jersey exacts a devastating toll on homeowners, their families, their neighborhoods and communities, which is why the State is committed to doing everything it can to provide New Jersey homeowners with the tools to fight back,’’ Attorney General Milgram said. “The mortgage foreclosure mediation program is designed to resolve foreclosure complaints. The difference between calling or not calling our hotline could be the difference between keeping a home or losing a home.”
“This program would not be operational without the hard work and dedication of 700 volunteer mediators and all those involved in their training. I would like to thank them along with the judges and staff who have worked to coordinate and organize this effort,” said Chief Justice Rabner.
The Judiciary is coordinating the start up of the mediation program in collaboration with the Office of the Attorney General, the Housing Mortgage Finance Agency and the Office of Dispute Settlement (ODS) in the Public Advocate’s Office.
The mediation program seeks to resolve foreclosure actions by proposing work-out and payment arrangements between distressed borrowers and lenders. The program refers homeowners who are facing residential mortgage foreclosure actions to housing counselors who are certified by HUD and NJ HMFA and who will recommend possible mortgage work-out options that may range from waiving penalties and fees to modifying loans with lower interest rates.
The program will provide lawyers to eligible homeowners. These lawyers will consult with housing counselors in proposing ways to resolve mortgage delinquencies. If a homeowner and lender, through a housing counselor and/or an attorney, are unable to resolve the matter out-of-court, the parties will appear before a neutral court-appointed mediator. The mediator, in turn, will assist the lender and borrower in trying to reach a voluntary and mutual agreement to resolve the loan delinquency.
Planners anticipate as many as 16,600 homeowners will participate in the foreclosure mediation program this year. It is estimated that as many as 60,000 homeowners may go through foreclosure this year.
In order to be eligible for the free mediation program, homeowners must not be in bankruptcy, the property in foreclosure must be the homeowner’s primary residence, and it must be a one to three-family residence. Free housing counselors and lawyers will be prioritized for those whose foreclosure complaint was filed on or after January 1, 2008.
Homeowners will be able to connect with the mediation program by calling a toll-free hotline, which is run by Legal Services of New Jersey (1-888-989-5277). The hotline will be staffed between 8 a.m. and 6 p.m. Monday through Friday.
People answering the hotline will screen callers for eligibility and when appropriate assign eligible homeowners to counselors, who will meet with the homeowner to assess his or her financial condition and, if possible, propose a work-out plan. The recommendation will be forwarded to the lender. Where it appears the callers have meritorious legal claims, they will be referred to Legal Services or other attorneys, as available.
If the lender and homeowner cannot resolve the foreclosure complaint out-of-court, the case will be scheduled for mediation, at which time the homeowner, counselor, and lawyer (for income-qualified homeowners) will work with the mediator and lender to resolve the mortgage loan default.
The Judiciary will provide free mediation to any qualified homeowner whose primary residence is the subject of a foreclosure action whether or not they filed an answer disputing the foreclosure. The homeowner may request foreclosure mediation up to the time of sheriff’s sale. As part of this program the Judiciary provides notice of the program to homeowners, recruits and trains mediators, and schedules the mediations.
To date, the Judiciary has signed up more than 700 mediators to participate in the foreclosure mediation program. Mediator training has been conducted by Judiciary staff in conjunction with the Office of Dispute Settlement in the Public Advocate’s Office and Legal Services of New Jersey.
“The Public Advocate supports the use of mediation in the public interest to resolve a wide variety of disputes,” said New Jersey Public Advocate Ronald K. Chen. “In this instance, the use of mediation to assist both homeowners and lenders to work out a mutually beneficial agreement will not only benefit the parties involved but also the public at large. I am pleased that the Department’s Office of Dispute Settlement was able to assist the AOC in training more than 700 mediators as part of this program.”
”Legal Services is pleased to be able to support this effort, both by making its statewide hotline available and by providing legal representation to many homeowners who have meritorious claims and defenses,’’ said Melville D. Miller Jr., president and general counsel of Legal Services of New Jersey.
HMFA will fund and train HUD-certified housing counselors participating in the mediation program and will monitor their work. Twenty-one housing counseling agencies responded to a bid proposal in the fall, including 12 agencies previously approved by HMFA to provide foreclosure prevention and asset preservation counseling programs. HMFA will also award funds for legal representation to providers. The lawyers will review proposed workout recommendations, review financial documents, negotiate with lenders’ attorneys and attend mortgage mediation sessions.
“Governor Corzine has made a commitment during these difficult economic times to assist those New Jersey residents who are in need,” said Community Affairs Commissioner Joseph V. Doria Jr. “This program will help keep people in their homes and combat the foreclosure crisis. I want to thank the Governor, the Attorney General and Marge Della Vecchia, the head of HMFA, for their hard work on this issue.”
“The principle purpose of this program is to provide a forum for mortgage debtors and financial institutions to explore a resolution other than foreclosure and keep people in their homes” said DOBI Commissioner Steven M. Goldman. “If a modified payment program is attainable it does not make economic sense for lenders to foreclose on properties. Not only do they lose a customer, but the property often sits empty and contributes to the decline of a neighborhood. With the help of this program, everyone benefits. Consumers avoid foreclosure and stay in their homes and lenders keep customers and avoid.
For Further Information:
David Wald (OAG)
Winnie Comfort (Judiciary)