Several New Jersey Legislators have proposed a plan to assist homeowners with subprime loans, those loans typically written for those will bad credit and low incomes. State Senator Ronald Rice wants a 6 month moratorium on subprime loan defaults, a new loan fund to help people stay in their homes and to allow some homeowners who loose their homes to stay for awhile.
The legislation calls for:
A 6 month moratorium to giver borrowers time to find a solution.
Creation of a fund generated by a $2000 fee charged to lenders for each subprime foreclosure and $1 million from the NJ Housing and Mortgage Finance Agency (NJ HMFA). The money would provide loans and counseling to help people stay in their homes.
Allowing those with subprime loans who loose their homes through foreclosure to remain as renters until the property is acquired by someone who wants to occupy it.
Will it work, will it be passed and signed into law? I think it'll be a tough sell. Questions that immediately come to mind are; will the fund produce enough money for real help, how many borrowers have worked to improve their credit since purchasing so they qualify for a new mortgage and will banks then become landlords, required to provide everything now mandated in the NJ Landlord Tenant Law.
I'm sure more questions will follow, but this is something to keep an eye on.