Today the New Jersey Governor signed A5130, colloquially referred to as the New Jersey Foreclosure Prevention Act. The Bill creates the “New Jersey Residential Foreclosure Prevention Program” and establishes and empowers the “New Jersey Housing and Mortgage Finance Agency” to run it. Under the program the agency is permitted to use state funds to purchase distressed properties for the purposes of foreclosure prevention.
Specifically the program authorizes the agency to establish partnerships with non-profits to purchase residential properties from institutional lenders that are either classified as non-performing or which are already subject to a deed in lieu, tax foreclosure judgment, or judgment of foreclosure and sale. The agency is then permitted to negotiate new agreements with the homeowners to make their payments more affordable and to allow them to remain in the home. While certain specifics of how this will operate in practice are still unclear, lenders should expect the agency to be a player immediately as the act took effect upon its execution.
As part of this bill an additional $350 fee will be charged as part of every foreclosure sale. This fee will be used to partially fund the agency. This seems to be the most measurable effect upon foreclosure plaintiffs in the short term. Clients are also urged to consider whether any assets may be suitable for this new program. Assets which are severely underwater and upon which hopes of a full recovery are slim should be given special attention as this program may provide a more profitable and immediate method of recovery for lenders than that provided by other alternatives.
Should you have any questions, please contact Richard O’Brien, Esq. (robrien@friedmanvartolo.com or Deborah Gallo, Esq. , Director of Operations (dgallo@friedmanvartolo.com).
