Bill Would Require State to Expend ‘Hardest Hit’ Funds to Keep Homeowners at Risk of Foreclosure in their Homes
TRENTON – A bill sponsored by Senator Raymond J. Lesniak which would require the State to expand participation in the HomeKeeper mortgage assistance program in order to help homeowners at risk of losing their homes to foreclosure was approved by the Senate today by a vote of 31-7, receiving final legislative approval.
“New Jersey is absolutely in the midst of a foreclosure crisis,” said Senator Lesniak, D-Union. “We’re second worst in the nation – behind only Florida – in the number of homeowners who are seriously delinquent in their home loans and at risk of being another foreclosure statistic. Governor Christie and his Administration have been asleep at the switch when it comes to mitigating the effects of this disastrous foreclosure crisis, and it’s time for New Jersey to utilize all the resources at our disposal to help keep people in their homes and pull our State back from the brink.”
The bill, S-2202, would require the Housing and Mortgage Finance Agency (HMFA), within the Department of Community Affairs, to expend the entire amount of funds provided to New Jersey from the federal government as part of the “Hardest Hit Fund” under the federal Troubled Asset Relief Program (TARP) for states experiencing a high rate of homes in danger of foreclosure. The State has received $300 million in “Hardest Hit” funds to help struggling homeowners and established the New Jersey HomeKeeper program within the HMFA to provide financial assistance to New Jersey homeowners who have fallen on hard times, but who otherwise have a track record of making their mortgage payments on time. Homeowners may be eligible for up to $48,000 in zero-interest, deferred-payment loans for a period of up to 24 months, and if the homeowner stays in their home for five years, the loan would be forgiven at a rate of 20 percent per year following the fifth year, until the loan is completely forgiven after the tenth year that the homeowner stays in their home.
A recent report in the Philadelphia Inquirer noted that New Jersey has spent only 10 percent of the funding awarded through the “Hardest Hit Fund,” helping only 750 homeowners. Under Senator Lesniak’s bill, the NJ HomeKeeper program would have to expend no less than 20 percent of unspent “Hardest Hit” funds in the first calendar year following enactment of the bill.
“Under Governor Chris Christie’s watch, the State Department of Community Affairs has done an abysmal job of administering the federally-funded ‘Hardest Hit’ money. With more homeowners in danger of losing their homes than almost anywhere else in the country, New Jersey cannot afford to squander the opportunity to help at-risk homeowners,” said Senator Lesniak. “We know that as more homes go into foreclosure, they put downward economic pressure on the rest of the community. It’s time that we start trying to reverse the foreclosure crisis afflicting our State, and it’s time that we use the funds at our disposal to help people in need.”
The bill was approved by the Assembly earlier this week by a vote of 47-29, and now heads to the Governor’s desk.