Legislation Was Prompted by Reports of Administration Sitting on Federal Funds that Were Designed to Help Homeowners Avoid Foreclosure
Legislation sponsored by Assembly Democrats Daniel Benson, Annette Quijano, Wayne DeAngelo, Connie Wagner and Tim Eustace to ensure that homeowners in danger of losing their homes to foreclosure receive critical financial assistance was approved 47-29 by the full Assembly on Monday.
The legislation arose amid continued concerns that the administration had failed to help many New Jersey homeowners facing foreclosure. New Jersey has the second highest foreclosure rate (7.7%) in the nation, yet the state has been slow to provide financial assistance to homeowners, with only 10 percent of the available federal funds being spent in the 15 months since New Jersey’s HomeKeeper program was launched.
“With our unfortunate distinction as the second highest foreclosure rate in the nation, clearly there are more New Jersey residents who would benefit from financial assistance through this program than have to date,” said Benson (D-Mercer/Middlesex). “We need to make sure that this program is working the way it was intended so that families can stay in their homes and our economy will benefit in the long-run.”
New Jersey was allocated approximately $300 million from the federal government as one of 18 states and the District of Columbia to receive assistance through the Hardest Hit Fund, which was established under the “Emergency Economic Stabilization Act of 2008.”
“The foreclosure crisis, in large part, helped spark our overall recession,” said Quijano (D-Union). “If we want to get our state back on a sound financial path, and help struggling families, we need to make sure we do everything in our power to stabilize our housing market.”
The bill (S-2022/A-3372) would require the New Jersey Housing and Mortgage Finance Agency (HMFA) to expend the entire amount of funds provided to the state by the federal government from the Hardest Hit Fund no later than December 31, 2017.
“In the first 15 months that this program was up and running, there may have been an untold number of struggling families who lost their homes because these funds were not administered in a timely fashion,” said DeAngelo (D-Mercer/Middlesex). “We have to make sure that does not continue in order to help homeowners avoid the stress and financial hardship of the foreclosure process.”
The bill also requires that those federal funds must be used solely and exclusively to provide financial aid to struggling homeowners through the New Jersey HomeKeeper program, to help those homeowners avoid foreclosure and maintain ownership of their homes.
“If administered properly, this program can be a critical tool to help distressed homeowners stay in their homes while also helping our overall economy,” said Wagner (D-Bergen/Passaic). “At the end of the day, the state should be helping, not hindering, this process.”
The bill requires the agency to expand the New Jersey HomeKeeper program to include components to facilitate principal reductions by lenders; second mortgage reduction or payoff; loans or subsidies to cover past-due amounts and facilitate reinstatement; mortgage assistance for underemployed and unemployed persons; and transition assistance such as a short sale deed-in-lieu of foreclosure, or relocation assistance.
“The federal government stepped up to the plate to help the most distressed states deal with the foreclosure crisis,” said Eustace (D-Bergen/Passaic. “Now the state must live up to its end of the bargain to help beleaguered homeowners get back on track. This bill will help ensure that.”
The bill also requires that the HMFA must review, and must approve or deny, an application for assistance under the New Jersey HomeKeeper program not later than the 90th day after the application is submitted by a homeowner.
The bill also requires that no later than January 31st of any calendar year, the HMFA must provide the legislature with a plan for the expenditure of remaining funds, as well as a year-end report detailing the amount of money expended through the New Jersey HomeKeeper program in that previous calendar year, the number of homeowners who were provided financial assistance through the program, and the amount of federal funds used for administrative expenses by the agency.
The measure now heads back to the Senate for final legislative approval.