By Joshua Burd
Developers are cheering the adoption of a law to stem foreclosures in New Jersey, calling it a move that supports the housing market while preventing the buildup of vacant properties.
The legislation, which Gov. Phil Murphy signed into law last week, creates a residential foreclosure program that will be led by the New Jersey Housing and Mortgage Finance Agency. To that end, the Trenton-based agency will take steps such as facilitating bulk purchases of nonperforming loans from institutional lenders, among other mitigation efforts.
“Combatting housing insecurity in New Jersey is essential during these extraordinarily trying times,” Murphy said. “We have an obligation to identify new and innovative ways to aid our state’s residents in this time of stress. This bill provides pathways to help more New Jersey homeowners remain in their homes.”
New Jersey Builders Association CEO Jeff Kolakowski said the New Jersey Foreclosure Prevention Act “will give the state another tool to combat foreclosures and promote a healthy housing market for all its residents.”
“This new law is an important piece of the puzzle to provide safeguards for homeowners and also to reduce the amount of vacant properties that are blighting their communities and reducing the value of other homes in the neighborhood,” Kolakowski said. “NJBA applauds the tireless efforts of the sponsors, Assemblywoman (Mila) Jasey and Senator (Troy) Singleton, along with Gov. Murphy, Lt. Gov. (Sheila) Oliver and their entire team who continue to stimulate a pro-housing environment across the state, encouraging homeownership and bringing people homes.”
He noted that Josh Mann, co-managing member of Iron Properties and the NJBA’s president-elect, “was an integral contributor to the initial bill” a decade ago, as the state was grappling with widespread foreclosures after the Great Recession. The newly enacted law directly references the long-term impact of the 2008 downturn and the state’s “susceptibility to prolonged periods of elevated rates of foreclosure” as evidence of the “need to provide alternative foreclosure mitigation measures.”
Under the legislation, HMFA would purchase “eligible properties” in furtherance of loss mitigation and foreclosure prevention, including residential properties or mortgage notes owned by an institutional lender as the result of a mortgage foreclosure judgment or a deed in lieu of foreclosure. Such properties would also include those owned by a municipality as a result of a tax foreclosure judgment or one that is subject to a nonperforming loan from a lender.
The law calls for HMFA to adopt a plan for the program using a newly established Foreclosure Intervention Fund, which will be revolving and non-lapsing, and enter into contracts or loans with community organizations to carry out the program. In signing the legislation, Murphy noted that the program would allow the agency to advance recommendations issued by his gubernatorial transition team in 2018, including the expansion of affordable housing by renovating foreclosed and abandoned homes that it acquires.
“The New Jersey Foreclosure Prevention Act acknowledges and seeks to assist struggling homeowners in New Jersey,” said Oliver, who serves as the state’s Department of Community Affairs commissioner and HMFA board chair. “This act and its ensuing programs will work in tandem with the state’s existing programs to help prevent our most vulnerable residents from losing their homes.”
The law follows other recent steps by Murphy’s team to stabilize the housing stock in New Jersey. Prior to signing the bill, the governor directed HMFA to expand its Foreclosure Mediation Assistance Program to include pre-foreclosure counseling to help homeowners avoid potential foreclosure and to begin offering counseling assistance to renters.
The expanded program has helped some 2,163 families, comprising roughly 1,430 rental households and about 500 owner-occupied households, according to a news release.
“This legislation will help New Jersey families keep their homes and ensure that foreclosed properties reenter the homeownership market, stabilizing neighborhoods and helping families become homeowners,” said Melanie R. Walter, HMFA’s executive director. “It facilitates crucial interventions including expansion of NJHMFA’s partnerships with Community Development Financial Institutions, creation of new mortgage products, and establishment of a revenue stream to support housing stabilization in our state.”