Legislation sponsored by Assemblyman Reed Gusciora bringing relief to home buyers and sellers by expediting the ironically labeled “short sale” of residential properties has been signed into law.
“This is a win-win-win for buyers, sellers and communities burdened by vacant homes,” said Gusciora (D-Mercer/Hunterdon). “Anyone who’s ever attempted to purchase a short sale knows the process is anything but short. The exorbitant amount of time it takes to process these sales puts an added burden on sellers, who are already struggling financially, and often dissuades buyers who don’t want to deal with all the red-tape delays. At the end of the day, this law will benefit our towns as well because it will help ensure homes don’t sit needlessly vacant, depreciating the value of the community.”
This bill amends New Jersey’s “Fair Foreclosure Act” to require residential mortgage loan servicers to engage in consultations on short sales with prospective buyers, and to respond to short sale offers from buyers within certain time periods.
Specifically, the bill requires a mortgage loan servicer to respond to a good faith offer from a seller, seller’s agent, or authorized third party to purchase the property through a short sale within 60 days of the date of the offer.
A short sale is sometimes used as an alternative to proceeding with a mortgage foreclosure against a debtor through a sale to a third-party buyer in which the lender or servicer agrees to release the mortgage lien on the property upon receipt from the buyer of a lesser amount than is owed on the mortgage.
While the “Fair Foreclosure Act” currently requires lenders to adhere to certain homeowner protection practices during the foreclosure process, this bill expands homeowner protections as to short sales by placing certain responsibilities on both lenders and servicers since servicers more typically manage mortgage loan accounts and assess short sale offers on behalf of lenders.
Under the bill, a response from a mortgage loan servicer would include an approval, a denial, or a request for further information. If the servicer decides not to approve a short sale, or fails to respond to an offer from the seller, seller’s agent, or authorized third party within 60 days, any deposit made by the buyer in connection with the purchase of the property shall be refunded in its entirety and the potential purchaser shall have no further obligation with respect to the sale or other disposition of the property.
Nothing in the bill would constitute a limitation on the ability of the servicer and debtor to participate in the New Jersey Judiciary’s Foreclosure Mediation Program or any other form of mediation or settlement discussion, or enter into an agreement as a result of that mediation or settlement discussion.
The bill will take effect on Sept. 19, 2017, 60 days following enactment.