(TRENTON) – Legislation Assemblywoman Bonnie Watson Coleman sponsored to create a fund to help struggling New Jersey families pay for foreclosure prevention activities such as legal and mediation services was released Monday by an Assembly panel.
The bill (A-1994) establishes a Foreclosure Prevention and Neighborhood Stabilization Trust Fund in the Department of Community Affairs. Money allocated to the fund will be utilized for foreclosure prevention activities, such as legal services to low- and moderate-income homeowners in danger of losing their homes to foreclosure. It could also pay for mediation services and training for non-governmental groups who assist homeowners in addressing the foreclosure process.
The fund will be financed through a temporary $800 surcharge placed on each foreclosure complaint filed in the state. The surcharge will expire five years after the effective date of this bill, or when the number of foreclosure complaint filed Statewide is less than 20,000, whichever occurs first.
“Many thousands of New Jersey residents have lost their homes and thousands of other homeowners are at risk of losing their homes in the immediate future as a result of the mortgage foreclosure crisis,” said Watson Coleman (D-Mercer/Hunterdon). “Foreclosure involves the loss of a family’s home, which is often the family’s most valuable asset, and foreclosure undermines the stability, health and economic vitality of neighborhoods, particularly the in urban neighborhoods where the a disproportionate share of foreclosures take place. We cannot stand idle. We need to find a way to help.”
The Department of Community Affairs shall 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 shall be allocated to qualified non-profit entities for the purpose of maintaining or expanding their foreclosure prevention programs. Entities receiving these funds shall issue quarterly reports detailing the success of their foreclosure prevention programs.
“It is possible to reduce the number of foreclosures, and thus mitigate the negative secondary effects that result from foreclosures, by providing resources to both public and not-for-profit entities to assist individuals at risk of foreclosure, and to acquire, and rehabilitate or demolish vacant and abandoned properties resulting from foreclosures,” Watson Coleman said. “In light of the direct relationship between foreclosure and family and neighborhood instability the imposition of a fee on creditors filing complaints for foreclosure will partially mitigate the harmful effects of foreclosures on the neighborhoods of the state.”
Any funds disbursed in excess of $10 million shall 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 requires 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.
“Foreclosures lead to billions of dollars in lost property value and result in millions of dollars of additional expenses to state and local governments,” Watson Coleman said. “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. We need to find a way to help, and this is a common sense approach.”
The bill was released by the Assembly Housing and Community Development Committee.