Legislation Was Prompted by Reports of Christie Administration Sitting on Federal Funds that Were Designed to Help Homeowners Avoid Foreclosure
Legislation sponsored by Assemblyman Dan Benson to ensure that homeowners in danger of losing their homes to foreclosure receive critical financial assistance was approved by an Assembly panel following a special hearing on Wednesday.
Benson’s legislation comes amid continued concerns that Gov. Christie has failed to help many New Jersey homeowners facing foreclosure. New Jersey has the second highest foreclosure rate (7.7%) in the nation, yet the Christie administration 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 bill (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.
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.
“It’s a real tragedy to think of how many homeowners may have lost their homes in the last 15 months or how many more are struggling with the stress and financial hardship of the looming foreclosure process, when this could’ve been avoided had these funds been administered more quickly,” added Benson. “A great deal of the recession was precipitated by the foreclosure crisis. In order to get New Jersey soundly back on the road to financial recovery, we need to make sure we do everything in our power to stabilize our housing market.”
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 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 bill was approved 4-2 by the Assembly Housing and Local Government Committee following a special joint hearing with the Financial Institutions and Insurance Committee to examine why the Christie administration has not been expending a significant portion of the federal funds allocated for struggling New Jersey homeowners.