NJ Senate Approves Foreclosure Bills

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State Sen. Ray Lesniak

State Sen. Ray Lesniak

TRENTON – The full state Senate approved a pair of bills sponsored by Senator Raymond J. Lesniak yesterday which are aimed at addressing New Jersey’s foreclosure crisis by transforming abandoned, foreclosed properties into livable homes and by requiring the state to expand participation in the HomeKeeper mortgage assistance program.

“New Jersey is second-worst in the nation – behind only Florida – in the number of homeowners who are seriously delinquent in their home loans,” said Lesniak, D-Union. “And Gov. Christie and his administration have admitted that were asleep at the wheel in terms of mitigating the effects of a disastrous foreclosure crisis. Because of this massive failure, New Jersey residents were evicted from their homes and pockets of blight have appeared in once-thriving communities. It’s time that New Jersey gets serious about helping at-risk homeowners stay in their homes and about cleaning up dilapidated, abandoned properties to make them livable market-rate and affordable housing opportunities.”

The first bill in the package, S-2157, which was approved by a vote of 22-17, would require the New Jersey Housing and Mortgage Finance Agency (HMFA) to facilitate and finance the purchase of foreclosed residential properties from institutional lenders, and dedicate such properties as affordable housing units or market-rate housing. HMFA would be able to use its bonding authority – without recourse to the state – federal funds and funds from the State Affordable Housing Trust Fund to finance the purchase of foreclosed homes by for-profit and not-for-profit corporations. Some properties could be deed-restricted with the consent of the affected municipality, to be used as affordable housing. The bill would ensure that State dollars would not have to be used for the purposes of the bill.

“We know that abandoned properties drive down the value on surrounding homes, and invite crime into our communities,” said Lesniak. “Rather than live with abandoned, foreclosed properties as a fact of life, this bill would create a mechanism to transform dilapidated properties into livable homes, and transform decaying communities into thriving ones. It doesn’t get any better than that.”

The second bill in the package, S-2202, which was approved by a vote of 29-9, would require the HMFA to expend the entire amount of funds provided to New Jersey from the federal government as part of the “Hardest Hit Fund” under the federal Troubled Asset Relief Program (TARP) for states experiencing a high rate of homes in danger of foreclosure.

The state has received $300 million in “Hardest Hit” funds to help struggling homeowners and established the New Jersey HomeKeeper program within the HMFA to provide financial assistance to New Jersey homeowners who have fallen on hard times, but who have a track record of making their mortgage payments on time. Homeowners may be eligible for up to $48,000 in zero-interest, deferred-payment loans for a period of up to 24 months, and if the homeowner stays in their home for five years, it would be forgiven at a rate of 20 percent per year following the fifth year, until the loan is completely forgiven after the tenth year that the homeowner stays in their home.

A recent report in the Philadelphia Inquirer noted that New Jersey has spent only 10 percent of the funding awarded through the “Hardest Hit Fund,” helping only 750 homeowners. Under Lesniak’s bill, the NJ HomeKeeper program would have to expend no less than 20 percent of unspent “Hardest Hit” funds in the first calendar year following enactment of the bill.

“The State Department of Community Affairs under Chris Christie’s watch has done an abysmal job of handling federally-funded ‘Hardest Hit Fund’ money. And with more homeowners in danger of losing their homes than almost anywhere else in the country, for the state to squander the opportunity to use federal funds to help those homeowners stay in their homes is unconscionable,” said Lesniak.

“Rather than dispersing this funding to families in desperate need of help to stay in their homes, the DCA under-committed resources and staff to this important endeavor. Only after the Governor received statewide criticism for these disgraceful actions, has he begun to make changes to the program. But in the meantime, thousands of New Jersey families were deprived of their ability to save their homes. This legislation will ensure that the DCA and the Governor do not slack off when it comes to saving people’s homes and communities.”

Both bills now head to the Assembly.


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