New Jersey municipalities have a new way to preserve affordable homes – by saving those that wind up in foreclosure. A law signed by the Governor requires that whenever a mortgage holder starts a foreclosure proceeding on a home that is deed-restricted as affordable (there is a cap on its sale price and it can only be purchased by low or moderate income purchasers) the mortgage holder must notify the municipality where the home is located, giving officials the option of purchasing the home if they believe it makes sense. https://www.njleg.state.nj.us/2018/Bills/S0500/362_R2.PDF . Under the Mount Laurel Doctrine, every community is required to provide its fair share of needed low cost housing and a municipality must replace lost affordable income units.
The law provides that deed restrictions on affordable housing are not extinguished by the foreclosure of the property. It amends foreclosure laws to require notice be given to the municipal clerk and the Commissioner of Community Affairs whenever a debtor is given notice that a foreclosure is pending on residential property that is a unit of affordable housing subject to affordability controls. The foreclosing lender is also required to furnish the debtor with the address and phone number of the municipal affordable housing manager and the New Jersey Housing and Mortgage Finance Agency. The bill also removes the ability of a foreclosing lender to use alternative methods of foreclosure not requiring a public sale when the housing unit involved is subject to affordability controls.
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