In an effort to avoid unintended consequences of provisions contained in an otherwise well-intentioned piece of legislation, Governor Chris Christie today conditionally vetoed A-359, which appropriately targets unregulated consultants engaged in foreclosure "rescue" scams against distressed homeowners. The Governor's changes to the bill further aid and protect distressed property owners by maintaining their ability to avoid foreclosure by entering into legitimate pre-foreclosure options, stemming further real estate losses and unnecessary bankruptcies.
As originally written by its sponsors, A-359 included a provision mandating that, in all instances, a distressed homeowner be paid at least 82 percent of the property's fair market value in consideration of the homeowner's transfer of title. While a laudable protection on its face, that part of the bill would have the consequence of freezing the marketplace for legitimate distressed residential properties-- limiting options and actually hurting the very people the bill purported to help.
"Wisely, the original intent of the bill was to specifically target the unregulated foreclosure consultants who at times employ fraudulent methods to obtain distressed properties at reduced costs," Governor Christie said in his veto message. "Attempting to regulate nearly all distressed properties could have the dire effect of curtailing legitimate transactions across the State, preventing homeowners from engaging in pre-foreclosure transactions to stem further losses, and forcing banks to foreclose on many of the thousands of financially distressed homes in New Jersey that are already "under water.'"
"Simply stated, without the option of legitimate, pre-foreclosure sales, many homeowners will end up in bankruptcy, while banks will end up with more foreclosed-upon property, more debt, and new requests for taxpayer-funded support."
As modified by Governor Christie and returned for consideration by the Legislature, the bill clarifies that only distressed property conveyances and "conditional conveyances" involving participation by a foreclosure consultant be subject to the "82 percent of fair market value" requirement. In this way, A-359 with the Governor's changes is comparable to legislation in other states, such as Illinois, that is more narrowly crafted to curb foreclosure rescue scams without adversely impacting the residential real estate market.
With the improvements he recommends, Governor Christie said he looks forward to signing the bill to protect distressed property owners from the unlicensed and unsupervised individuals who might prey on the vulnerable.
Assembly sponsors of A-359 were Assemblymembers Gary S. Schaer (D-Bergen, Essex, Passaic), John J. Burzichelli (D-Salem, Cumberland, Gloucester), Bonnie Watson Coleman (D-Mercer), and Wayne P. DeAngelo (D-Mercer, Middlesex), and Senate sponsors of the companion bill included Senators Shirley K. Turner (D-Mercer) and Brian P. Stack (D-Hudson).