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 unanimously approved by the Senate Economic Growth Committee today.
“This bill is about giving municipalities and the State the tools needed to clean up blighted neighborhoods and convert foreclosed homes into affordable and market-rate homes,” said Senator Lesniak, D-Union, the Chairman of the Economic Growth Committee. “Right now, our home state is reeling from the dual crises of a massive increase in home foreclosures and lack of affordable housing opportunities for low- and middle-class families. This bill would create a mechanism to reclaim and renovate foreclosed homes to combat the economic drain of foreclosed properties within a municipality.”
“This bill represents a creative approach to beginning to solve the affordable housing problem facing many New Jersey families, while dealing with the issue of urban and suburban blight and without contributing to rampant overdevelopment and sprawl facing so many communities,” said Senator Buono, D-Middlesex. “It’s a positive first step to revitalize struggling communities and provide housing opportunities for working-class families. At the end of the day, it’ll result in more New Jersey residents on the path towards home ownership, fewer abandoned properties in our neighborhoods, and redevelopment of our communities.”
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 foreclosed properties to be used as affordable housing. The bill would also create incentives for municipalities to transition foreclosed properties to affordable housing, 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 10,000 new affordable units and 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.
“One foreclosed property can have a negative impact on the value of the rest of the homes on the block,” said Senator Buono. “This isn’t just about foreclosed properties or affordable homes – it’s about communities in economic crisis, and it affects all New Jersey residents, whether they qualify for affordable housing, are living in foreclosed home, or not.”
“There are tens of thousands of vacant, foreclosed homes in New Jersey, and more are being added every single day,” said Senator Lesniak. “The foreclosure crisis exists in every municipality in the State – not just in poor, urban areas. S-1566 creates a mechanism and incentives to allow the State and municipalities to clean up abandoned, dilapidated properties which put a drain on the local economy, while restoring these homes for affordable and market-rate housing. It doesn’t get any better than that.”
The bill now heads to the Senate Budget and Appropriations Committee before going to the full Senate for consideration.