TRENTON – Senator M. Teresa Ruiz has introduced legislation to prohibit state investments in companies that target victims of Hurricane Maria in Puerto Rico, by pursuing foreclosures – either directly or indirectly – during the foreclosure moratorium put in place by the federal government in the wake of the disaster.
The bill comes after reports of advocates urging the New Jersey State Investment Council to halt investments in two private equity funds with financial ties to businesses that are pursuing foreclosures on the devastated island.
“The people of Puerto Rico continue to suffer from the effects of Hurricane Maria months after the storm devastated the island. An overwhelming number of residents are without basic necessities, including electricity on some parts of the island, and are struggling just to get by,” said Senator Ruiz (D-Essex). “It is unconscionable that companies are targeting victims of this disaster with foreclosure actions. Our state should not be in the businesses of profiting from investments in companies that pursue home foreclosures and ignore the suffering and dire financial circumstances facing the residents of Puerto Rico.”
The New York Times reported in December that about one-third of the island’s 425,000 homeowners were behind on their mortgage payments to banks and Wall Street firms that previously bought up distressed mortgages. Tens of thousands had not made payments for months. Some 90,000 borrowers became delinquent as a consequence of Hurricane Maria, according to Black Knight Inc., a data firm formerly known as Black Knight Financial Services.
Residents won a reprieve when the federal government imposed a temporary moratorium on foreclosures, which stops banks and investors that bought mortgages at cut-rate prices from evicting delinquent borrowers or starting new foreclosures, according to the report. Many lenders also have agreed to waive missed payments during the moratorium. But that moratorium is scheduled to expire in early 2018, and lawyers and housing counselors expect that to trigger a surge in foreclosures, the Times reported.
The bill (S1914) prohibits the state from investing any assets of any pension or annuity fund under the management of the Division of Investment in the Department of the Treasury in any entity directly or indirectly engaged in mortgage foreclosures of property during periods of a federally announced mortgage foreclosure moratorium in a Presidentially-Declared Major Disaster Area impacted by Hurricane Maria.
The bill also applies the investment prohibition to entities involved in mortgage foreclosures during extensions of those moratoria and during period of lapses in extensions of a moratorium. The bill is intended to withdraw from state investments in private equity funds that have holdings in mortgage companies that aggressively pursue home mortgage foreclosures on the island of Puerto Rico which was left devastated by Hurricane Maria.
The bill requires the Director of the Division of Investment to provide an (1) initial report detailing the current investments held in violation of the bill within 60 days of the date of enactment and (2) a monthly report detailing the progress made in disposing of those investments.