In an attempt to reduce foreclosures and further assist New Jersey homeowners at risk of losing their homes, New Jersey Governor Jon Corzine has signed the Mortgage Stabilization and Relief Act into law. The legislation is another component of the Economic Assistance and Recovery Plan.
It establishes the Mortgage Stabilization Program and the Housing Assistance and Recovery Program.
In addition the new laws also impose more requirements on lenders foreclosing on mortgages. The New Jersey Housing and Mortgage Finance Agency (HMFA) will be responsible for the administration of the two new programs.
Through the Mortgage Stabilization Program, HMFA will promote modifying or refinancing of first mortgage loans in imminent danger of foreclosure to qualified homeowners by offering non-amortizing (no monthly payment) second mortgage loans.
The State will provide a mortgage stabilization loan of up to $25,000 to match the lender's contribution. This is an attempt to bring the mortgage payments down to an amount that the borrower can afford. Both the State's and lender's assistance loans will be repaid by the homeowner upon sale of the property.
To qualify for assistance, a home owner's household income may not exceed 120 percent of the area median household income or the HMFA's Mortgage Program income limits, which vary by County. In Ocean County, the income limit for home owners is $114,660.
The lender must agree to write the mortgage down to the current value of the home. Homeowners who accept program assistance are required to participate in agency approved household budget counseling sessions.
The $25 million needed for this Mortgage Stabilization Program is appropriated at $25 million through Long Term Obligation and Capital Expenditure Fund.
The Governor's original proposal would have funded this through an assessment against every bank filing a foreclosure action against a New jersey home owner. Now the funding comes from money set aside to pay down the state's indebtedness.
A second program, the Housing Assistance and Recovery Program (HARP), will help homeowners who face imminent foreclosure stay in their home while paying affordable rent until the homeowner is able to buy back the property.
HMFA will provide financial support through the Housing Assistance and Recovery Program Support Fund to certain nonprofit and public entities to execute lease-purchase agreements with existing homeowners who meet program requirements.
$15 million from the Long Term Obligation and Capital Expenditure Fund is appropriated for the program. This program is also funded through money set aside to pay down the state debt.
This action follows enactment of separate legislation, signed last month, that called on the Administrative Office of the Courts to provide mediation services between the homeowner and their creditors to assist in negotiating an agreement that allows the borrower to remain in the home with an affordable monthly mortgage payment.
The new laws also protect neighborhoods, according to Governor Corzine, by requiring creditors who initiate foreclosure proceedings to notify municipalities where the foreclosed property is located. As a result, municipalities now have recourse against those creditors who fail to comply.
In addition, the legislation also adds a six-month forbearance period prohibiting creditors from taking steps to remove the borrower/homeowner from a property.
If you're facing problems meeting your mortgage commitment, and own a home in Waretown, Barnegat, Manahawkin, Long Beach Island, Little Egg Harbor, Tuckerton or in northern Atlantic County, contact me for more information on these programs and others that can help you!
Further information on foreclosure assistance in New Jersey is available if you click here. This link will take you to NJ Legal Services. Or you can call 1-888-989-5277 Monday through Friday from 8am through 6pm.