Jasey & Green Bill to Ensure Continuation of Program to Stave off Foreclosures Clears Assembly Panel

(TRENTON) – Legislation sponsored by Assembly Democrats Mila Jasey (D-Essex/Morris) and Jerry Green (D-Middlesex/Somerset/Union) to ensure the state’s foreclosure mediation program continues to be available to residents facing foreclosure was released Thursday by an Assembly panel.

New Jersey’s Foreclosure Mediation Program was established in 2009 by the New Jersey Judiciary in response to an alarming increase in residential foreclosures. This bill (A-4506) would ensure the Foreclosure Mediation Program’s continuation by establishing it in statute, and would strengthen the program to more effectively protect home ownership in New Jersey.

“New Jersey has the unfortunate distinction of having the highest foreclosure rate in the country. This sobering reality makes this program all the more valuable,” said Jasey. “Foreclosures wreak havoc on families and communities. Preserving this program is vitally important for our residents, our neighborhoods and our economy, which can all be destabilized by foreclosure.”

“This program gives homeowners risking foreclosure a chance to work with their lenders on a solution that will allow them to keep their homes. Given the foreclosure crisis in our state, it would be foolish to squander it,” said Green. “This bill ensures this program is available for homeowners who might be struggling financially. No one should lose their home when they have a chance to save it.”

The bill requires that, at the time a homeowner-borrower receives a notice of intention to foreclose, said homeowner-borrower must also receive written notice of the option to participate in the Foreclosure Mediation Program. When a mortgage foreclosure complaint is filed against an eligible property, the homeowner-borrower must again receive written notice of the option to participate in the Foreclosure Mediation Program. The written notice must be available in both English and Spanish.

The bill authorizes eligible homeowners to submit a mediation request, thereby initiating the process of scheduling a mediation session with their lender. Along with the mediation request, the homeowner may be required to submit additional information that may be necessary for creating a loan modification, or other agreement, but will not have to pay any fees to participate in the program.

The bill requires lenders to have a representative attend the mediation session, either in person or by telephone, who has authority to reach a mutually acceptable loan modification, loan workout, refinancing agreement, or other resolution. If either party fails to attend a mediation session or make a good faith effort to mediate, courts will have the authority to penalize the party with a fine of up to $1,000, through allowing the other party to recover reasonable attorney’s fees and litigation expenses, or through any other sanction the court deems appropriate. The bill also requires the use of a trained foreclosure prevention and default mitigation counselor to act as mediator in any controversy or issue submitted to the mediation program.

The bill also creates a dedicated, non-lapsing fund within the General Fund to be known as the “Foreclosure Mediation Fund” that would be administered by the Administrative Office of the Courts. When filing a foreclosure complaint, a lender must pay $50 in addition to the foreclosure complaint filing fee. This fee, as well as all fines imposed on lenders for noncompliance of obligations of the mediation program found in subsection b. of section 5 of the bill, would go in this fund to support the operation of the program, and to enhance the integrity of the mortgage foreclosures review process

The bill was approved by the Assembly Housing and Community Development Committee.