N.J. homeowner protection measures pick up steam

NJ Foreclosure News

TRENTON -- While some components of Gov. Jon S. Corzine's economic recovery plan have moved through the Legislature quickly in the last month, measures to address the state's growing number of mortgage foreclosures has gotten off to a slower start.

Those efforts, however, picked up steam late last week with the advance of two spending bills focused on keeping people in their homes and stabilizing neighborhoods.

The more controversial of the two measures gained traction when a proposed $2,000 fee charged to lenders that foreclose on homeowners with subprime mortgages was dropped from the bill, among other changes. Banking industry groups had strongly opposed the fee, arguing it would dissuade lending institutions from doing business in New Jersey.

Sen. Ronald Rice, D-Essex, the bill's sponsor, said he believed the fee wouldn't have hurt lenders but noted a number of Democratic and Republican lawmakers felt otherwise.

"Politics is the art of compromise," Rice said. "So that people don't continue to sink, we're trying to get this vote out now. Time is of the essence."

Rice's bill, which moved out of the Senate Budget and Appropriations Committee on Thursday and is likely headed to a Senate floor vote, would create two programs to help struggling homeowners. To qualify, people would have to live in the homes they're at risk of losing, earn below 120 percent of their area's median income and agree to housing counseling.

Under the $25 million Mortgage Stabilization Program, the state would work with lenders to modify mortgages so that homeowners can afford them and would provide loans up to $25,000 that the homeowner would have to pay back. Between 1,500 and 2,500 people would get help on a first-come, first-served basis, said Marge Della Vecchia, executive director of the state Housing and Mortgage Finance Agency, which would run both programs.

Under the $15 million New Jersey Housing Assistance and Recovery Program, certified community organizations would receive state funding to enter into lease-purchase agreements with struggling homeowners.

The nonprofit groups would buy a homeowner's property, rent it to the person at an affordable rate for no more than three years, then sell it back to the homeowner at no profit when he or she is financially ready.

Money for the programs originally was to have come from the $2,000 fee assessed against lenders. Now, the programs would be funded from a $650 million account that Corzine had set aside to pay down some of the state's debt.

"(The fee) relieves the state from paying for these much-needed resources, and moreover it provides a critical incentive to the lenders to negotiate with the homeowner," said Diane Sterner, executive director of the Housing and Community Development Network of New Jersey, who favors reinstating the levy, as well as a provision also removed from the plan that would have allowed homeowners with subprime mortgages to request a six-month hold to give them time to renegotiate their loans.

"The fees and the six-month delays would have increased costs quite substantially. This is not the way to change New Jersey's reputation as a state that's unfriendly to business," countered E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey.

Assembly Majority Leader Bonnie Watson Coleman, D-Mercer, is currently working to amend her homeownership preservation bill along the same lines in the Assembly, Rice said.

Both the Senate and Assembly appropriations committees also on Thursday advanced a $64 million spending bill, which will be funded by federal dollars and $12.5 million from the state's surplus, to assist neighborhoods hit hard by the housing crisis and provide needy homeowners with mortgage counseling and a foreclosure mediation program that's based on a successful Philadelphia model.

"Keeping homes occupied is one of the keys to stabilizing neighborhoods," said Michael Meyer, Newark's housing director.

 

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