(TRENTON) – Legislation sponsored by Assembly Democrats Jerry Green, Shavonda Sumter and Sheila Oliver to help families at risk of losing their homes avoid foreclosure and keep their homes was approved Monday by the Assembly Housing and Community Development Committee.
The bill (A-2036) would establish a Foreclosure Prevention and Neighborhood Stabilization Trust Fund in the Department of Community Affairs. Money allocated to the fund would be utilized for foreclosure prevention activities, such as legal services to low and moderate income homeowners in danger of losing their homes to foreclosure, mediation services, and training for non-governmental groups who assist homeowners in addressing the foreclosure process.
“New Jersey continues to have one of the highest foreclosure rates in the country,” said Green (D-Middlesex/Somerset/Union), who chairs the committee. “Foreclosures undermine the health and economic vitality of neighborhoods, particularly in urban neighborhoods where a disproportionate share of foreclosures take place. This fund can help residents keep their homes and prevent the adverse effects of foreclosure on families and neighborhoods.”
“Foreclosures lead to billions of dollars in lost property value and result in millions of dollars of additional expenses to state and local governments,” said Sumter (D-Passaic/Bergen). “It is in the best economic interest of the state to give homeowners who are facing foreclosure the resources needed to keep their homes and avoid the harmful effects of foreclosures on our communities.”
“Foreclosures, particularly in urban neighborhoods, often result in abandonment and deterioration of the property, creating additional financial pressures on local governments and severely destabilizing the neighborhoods where the properties are located,” said Oliver (D-Essex/Passaic). “By providing resources to both public and not-for-profit entities to assist individuals at risk of foreclosure, we can help prevent this financial burden on neighborhoods and municipalities.”
The fund would be financed through a temporary $800 surcharge placed on each foreclosure complaint filed in the state. The surcharge would expire five years after the bill’s effective date, or when the annual number of foreclosure complaints filed is less than 20,000, whichever occurs first.
The Department of Community Affairs would provide up to $500,000 from the fund to train qualified vendors to provide training to local governments and non-profit entities undertaking neighborhood stabilization efforts. The department may utilize $500,000 in the first year of the fund, and $300,000 each year thereafter, for the purpose of collecting and disseminating foreclosure data. Following these disbursements from the fund, the next $10 million collected during the fiscal year would be allocated to qualified non-profit entities for the purpose of maintaining or expanding their foreclosure prevention programs. Entities receiving these funds would issue quarterly reports detailing the success of their foreclosure prevention programs.
Any funds disbursed in excess of $10 million must be provided to local governments, public authorities, or non-profit community development or housing organizations to mitigate the negative secondary effects of foreclosures in residential neighborhoods. These funds may be used to purchase, repair, or demolish vacant properties on which a notice of foreclosure has been served.
This legislation would require a municipality that utilizes money from the fund for code enforcement or nuisance abatement purposes to make a diligent effort to recover the expended funds from the property owner or the creditor seeking to foreclose on the property.
Under the bill, creditors would have to report to the department on a quarterly basis to provide information, segregated by county and municipality, pertaining to the status and disposition of each foreclosure action, specifying whether such action was disposed of through sheriff’s sale, short sale, or loan modification, and the terms of the modification, refinancing, or any other outcome. Under the bill, the report must be provided no later than 30 days following the end of each quarter, and a copy of the quarterly report also shall be submitted to the Department of Community Affairs in the same manner and time as prescribed for submission to the Department of Banking and Insurance.