TRENTON – A bill sponsored by Senators Nia H. Gill and M. Teresa Ruiz to protect homeowners caught up in the subprime mortgage crisis as well as those threatened by foreclosure was signed into law today by Governor Corzine.
The new law is called The Save New Jersey Homes Act of 2008.
“This new law reflects our intentions to help residents stay in their homes while they make good-faith efforts to keep their financial commitments,” said Senator Gill, D-Essex and Passaic.
“Many homeowners who were deceived by unscrupulous finance companies will get time under this law to restructure their finances and pay their debts,” said Senator Ruiz, D-Essex.
Under the new law, S-1853/A-2780, eligible borrowers from state-chartered financial institutions could get three-year extensions to continue paying their introductory rates on variable-rate mortgages while still being required to ultimately pay off the higher charges before transferring the title to their homes.
“This law is a recognition that the homeowners with the determination to keep paying for their homes shouldn’t just be thrown out of them,” said Senator Gill.
Senator Ruiz noted that the new law will require creditors to notify those threatened with foreclosure about the protections enacted by the Legislature to enable them to get extensions and keep their homes.
“Now, homeowners faced with foreclosure will receive notices – in plain language -about alternatives to foreclosure and rights to obtain a three-year extension to keep paying their initial mortgage rate,” said Senator Ruiz.
The two Democratic senators noted that New Jersey, particularly in its urban centers, has some of the highest foreclosure rates in the nation with one realty tracking group claiming foreclosure actions in the State rose 66 percent in the first quarter of this year and the Department of Banking and Insurance listing more than 12,000 homes in foreclosure for the same period.
“This new law will help both borrowers and lenders because it will require continued payments of initial mortgage rates and, ultimately, all deferred interest,” said Senator Gill. “That will help decrease housing being abandoned in situations where desperation prompts people to just stop making mortgage payments.”
Senator Ruiz said the law will expire January 1, 2011.