Signed by Governor Phil Murphy

Vote Smart's Synopsis:

Vote to pass a bill that establishes the New Jersey Foreclosure Prevention Act.

Highlights:

• Establishes the New Jersey Housing and Mortgage Finance Agency (Sec. 3).

• Defines ‘eligible property’ as any residential property or mortgage note that is owned by an institutional lender as the result of a mortgage foreclosure judgment or a deed in lieu of foreclosure, is by a municipality as the result of a tax foreclosure judgment or is subject to a nonperforming loan from an institutional lender (Sec. 3).

• Defines ‘Qualified Community Development Financial Institution’ as a community development financial institution that has a minimum of $50 million in assets and a minimum of 2 years' experience in the financing and acquisition of real estate for affordable housing (Sec. 3).

• Establishes the New Jersey Residential Foreclosure Prevention Program to ensure that loss mitigation and foreclosure prevention methods are taken in eligible properties (Sec. 3) 

• Authorizes the Housing and Mortgage Finance Agency to (Sec. 4): 

• Enter into contracts with any person, corporation, or entity which the agency determines to be necessary or appropriate to carry out its responsibilities;

• Employ the consulting services of real estate and loan portfolio asset management firms, property management firms, auction marketing firms, brokerage services firms, appraisers, and such other consultants and employees required in the judgment of the agency; and

• Adopt a funding plan for the Residential Foreclosure Prevention Program within 180 days from the day the ACT is enacted.

• Specifies that the Agency may enter into contracts with no more than 2 Qualified Community Development Financial Institutions to negotiate, bid for, and purchase eligible properties and mortgage assets for the purpose facilitating the program (Sec. 5).

• Requires contracts with qualified community development financial institutions to include the following (Sec. 5): 

• Amounts, schedules and types of funding; 

• The repayment schedule for the portion of the funding to be repaid;

• Targeted goals of homeowner interventions; 

• Specification of reasonable administrative costs for the community development financial institution; and 

• Criteria for the purchase, sale and lease of property involved in the program.

• Authorizes the agency to provide grants to the following bodies in order to advance its goal of preventing foreclosures (Sec. 5): 

• Non-profit housing sponsors

• Municipalities; or 

• Other governmental entities.

• Requires that loans made to the Agency satisfy the following conditions (Sec. 7): 

• The time period for the loan should not exceed 50 years; 

• The amount of the loan should not exceed 90 percent of the total project cost; 

• The interest rate shall be determined by the agency at the lowest level consistent with its cost of operation and its responsibilities to the holders of its bonds;

• The loan shall be evidenced by a mortgage note or bond and by a mortgage which shall be a first lien on the project and which shall contain such terms and provisions and be in a form approved by the agency; and 

• The loan shall be subject to an agreement between the agency and the housing sponsor which will subject the housing sponsor and its principals or stockholders to limitations established by the agency; and 

• No loan shall be made for the construction, improvement or rehabilitation of a housing project for which tax exemption is granted by a municipality unless the tax exemption remains in effect during the entire term of the loan, unless a lesser period of tax exemption is approved by the agency

• Authorizes the agency to do the following during the construction, improvement or rehabilitation of a housing project (Sec. 7): 

• To enter upon and inspect without prior notice any project; 

• To order such alterations, changes or repairs as may be necessary to protect the security of its investment in a housing project or the health, safety, and welfare of the occupants thereof;

• To order any managing agent, project manager or owner of a housing project to do such acts as may be necessary to comply with the provisions of all applicable laws or ordinances or any rule or regulation of the agency or the terms of any agreement concerning the project; and 

• To require the adoption and continuous use of uniform systems of accounts and records for a project and to require all owners or managers of a project to file annual reports containing that information.

Full Bill Text