Measure Would Address Foreclosure Crisis in New Jersey, Provide Credit to Municipalities Which Transition Foreclosed Property to Affordable Housing
TRENTON – A bill sponsored by Senators Raymond J. Lesniak and Barbara Buono which would establish a comprehensive program to transition foreclosed property into affordable housing was approved by the Senate today by a vote of 21-18.
“New Jersey is in the midst of a nearly unprecedented foreclosure crisis, and abandoned properties are exacerbating an already bad situation,” said Senator Lesniak, D-Union. “This bill would create a new tool for local officials and State agencies to clean up blighted neighborhoods and convert abandoned, foreclosed homes into affordable and market-rate housing. Through this legislation, we will be able to reclaim and renovate foreclosed properties in order to protect our communities from the downward economic spiral caused by urban and suburban blight.”
“Just one foreclosed property can have a negative impact on the property values of the rest of the homes on the block,” said Senator Buono. “This bill isn’t just about foreclosed properties or affordable homes – it’s about communities in crisis, and it affects all New Jersey residents, whether they live in a home in danger of foreclosure or not.”
The bill, S-1566, would establish a central agency under the New Jersey Housing and Mortgage Finance Agency (HMFA) to use funds from the State Affordable Housing Trust Fund to purchase and deed-restrict abandoned foreclosed properties, with the consent of the affected municipality, to be used as affordable housing. The bill would also create incentives for municipalities to transition abandoned properties to affordable housing on their own, giving them a 2-to-1 match against their affordable housing obligation for affordable units created from foreclosed properties using funds from municipal affordable housing trusts. The bill sponsors said the bill could result in over 10,000 new affordable units and over 10,000 less unoccupied, boarded-up properties.
Senators Lesniak and Buono said that the initiative would be paid for by tapping into unused funds held in the State Affordable Housing Trust Fund and in municipal affordable housing trust funds, as well as excess funds received from the Realty Transfer Fee, federal funds reserved for affordable housing production and neighborhood revitalization, and the HMFA’s bonding capacity.
The bill is supported by the New Jersey Bankers Association, the New Jersey Realtors Association, the New Jersey Builders Association, the New Jersey League of Municipalities and the Housing and Community Development Network of New Jersey, among other advocacy groups.
“There are more than 100,000 homes in New Jersey that are already in the foreclosure process, according to estimates published in the Star Ledger,” said Senator Buono, D-Middlesex. “These properties could be – and should be – converted to affordable housing in order to meet the needs of a demographic that finds it increasingly difficult to pay for housing. This program would create a five-year window for the State to step in and jump start resolution of the foreclosure crisis, while meeting the housing needs of our State’s residents.”
“The foreclosure crisis exists in urban communities and suburban communities, in poor communities and affluent communities,” said Senator Lesniak. “S-1566 would help combat the widening foreclosure crisis by empowering municipalities to clean up abandoned, blighted properties, and by engaging the State in turning foreclosed properties into productive homes. It doesn’t get any better than that.”
The bill now heads to the Assembly for consideration, where it is scheduled for a vote later today.