The COVID-19 pandemic has had a substantial impact on many homeowners facing lasting income reductions as a result of losing their job or the economic downturn.
Legislation sponsored by Assembly members Britnee Timberlake (D-Essex, Passaic), Mila Jasey (D-Essex, Morris), and Angela McKnight (D-Hudson) that would provide protections to homeowners during the COVID-19 pandemic emergency period was advanced Wednesday by the Assembly Housing Committee.
The sponsors issued the following joint statement on the bill:
“As residents work to get back on their feet after an unexpected year of financial hardship, many who have struggled to make their mortgage payment due to the economic impact of the pandemic need extra assistance to keep their homes.
“This legislation will help make sure banks offer a fair mortgage forbearance for up to 15 months retroactive to March 9, 2020, and ensure predatory forbearances demanding lump-sum payments and additional fees or interest do not occur. It will also protect against negative credit reporting for payments they may have missed throughout the pandemic.
“Landlords and renters are in turn supported under the bill by taking the burden off of homeowners and giving everyone time to catch up on their financial situation.”
“New Jersey leads the country in foreclosures, and our urban communities lead the state. It is important to safeguard against foreclosure by helping people to hold on to their home which is a family’s greatest material asset and wealth-building tool.
The bill (A-5864), provides that during the emergency period, a creditor is required to grant a mortgage forbearance to an impacted homeowner if the impacted homeowner submits a written request to the mortgage servicer affirming the following:
(1) the impacted homeowner has suffered a substantial reduction of income resulting from COVID-19 or the Public Health Emergency or the State of Emergency declared in response thereto, including a financial hardship from a reduction in hours or loss of employment, or increased costs incurred in necessary child care resulting from the closure of schools or caring for family members who are ill due to COVID-19 or quarantined due to suspected exposure to COVID-19, or for funeral costs due to COVID-19;
(2) the gross household income of the homeowner does not exceed 150 percent of the area median income after hardship unless this requirement for eligibility is waived by the mortgage lender; and
(3) the impacted homeowner’s bank accounts collectively contain less than six months’ reserves of the impacted homeowner’s gross household income for 2019.
The measure was amended in committee to expand forbearance protections to small owner-occupied landlords with up to 4 units and expand the forbearance period from 180 days to a minimum of 6 months with up to 15 months of forbearance available.
The bill will now go to the Assembly Speaker for further consideration.