(TRENTON) – Legislation sponsored by Assemblywomen Cleopatra Tucker (D-Essex) and Britnee Timberlake (D-Essex/Passaic) to help homeowners facing foreclosure keep their homes was released Monday by an Assembly committee.
Since September 2015, New Jersey has had the highest or second-highest number of new foreclosure proceedings filed every month.
“Foreclosures not only affect homeowners, but entire neighborhoods. A house that sits vacant for years can drag property values down and attract nuisances,” said Tucker. “This gives homeowners more time so they can pursue other viable options that will allow them to keep their homes, and prevent the inevitable impact of a foreclosed property on nearby homes.”
“The sudden loss of a job or a medical emergency can mean real trouble for homeowners. Given the impact on homeowners and communities, foreclosure proceedings should be the absolute last resort,” said Timberlake. “This buys homeowners who are experiencing financial difficulty time to find other alternatives that will allow them to avoid foreclosure and keep their homes.”
Under the bill (A-3119), a residential mortgage lender that files and serves – pursuant to the Fair Foreclosure Act – a summons and complaint of foreclosure on a high risk mortgage loan would have to grant the borrower a six-month period of forbearance, upon written request of the borrower, to pursue a loan workout, loan modification, refinancing, or other alternative through the Judiciary’s Foreclosure Mediation Program, if eligible, or another form of mediation or settlement discussion. During the forbearance, the interest rate on the high risk mortgage loan would not increase and the creditor would take no further action to pursue foreclosure of the property.
The bill would provide that upon serving the summons and complaint in a foreclosure action, the residential mortgage lender would notify the borrower of the borrower’s right to forbearance, and, upon receipt of written request by the borrower, within 30 days of the receipt of the summons and complaint, the residential mortgage lender would grant the borrower a six-month period of forbearance, beginning on the date the residential mortgage lender receives the borrower’s request.
Upon receipt of a request for forbearance, the residential mortgage lender would have to: suspend all efforts during the forbearance period to advance any judicial proceeding in furtherance of the foreclosure action; and notify the court that forbearance has been granted.
Under the bill, when a forbearance period is granted by the residential mortgage lender, the borrower and residential mortgage lender would have to participate in the Judiciary’s Foreclosure Mediation Program, if eligible, or another form of mediation or settlement discussion.
If the borrower ceases to occupy the property at any time during the period of forbearance, or if the borrower affirmatively advises the residential mortgage lender, in writing, that the borrower will not participate in the Judiciary’s Foreclosure Mediation Program or another form of mediation or settlement discussion, the residential mortgage lender would then notify the court, and upon notification, and approval of the court, the period of forbearance shall be deemed to have ended.
The provisions of the bill relating to the six-month period of forbearance would expire two years following the effective date of the bill. However, a forbearance period would continue for its entire six-month period notwithstanding the expiration of the bill’s provisions.
The bill was released by the Assembly Housing and Community Development Committee.