Bill Package Would Transform Abandoned, Foreclosed Properties into Livable Homes, Would Require State to Expand Participation in NJ HomeKeeper Program
TRENTON – A pair of bills sponsored by Senator Raymond J. Lesniak which would address New Jersey’s foreclosure crisis by transforming abandoned, foreclosed properties into livable homes and by requiring New Jersey to expand participation in the HomeKeeper mortgage assistance program was approved by the Senate Budget and Appropriations Committee today.
“New Jersey is second-worst in the nation – behind only Florida – in the number of homeowners who are seriously delinquent in their home loans,” said Senator Lesniak, D-Union. “And Governor Christie and his Administration have not lifted a finger to help mitigate the effects of a foreclosure crisis which is forcing New Jersey residents out of their homes and creating pockets of blight in once-thriving communities. It’s time that New Jersey gets serious about helping at-risk homeowners stay in their homes and about cleaning up dilapidated, abandoned properties to make them livable market-rate and affordable housing opportunities.”
The first bill in the package, S-2157, which was approved by a vote of 7-6, would require the New Jersey Housing and Mortgage Finance Agency (HMFA) to facilitate and finance the purchase of foreclosed residential properties from institutional lenders, and dedicate such properties as affordable housing units or market-rate housing. HMFA would be able to use its bonding authority – without recourse to the state – federal funds and funds from the State Affordable Housing Trust Fund to finance the purchase of foreclosed homes by for-profit and not-for profit corporations. Some properties could be deed-restricted with the consent of the affected municipality, to be used as affordable housing.
The bill was amended in Committee to ensure that State dollars would not have to be used for the purposes of the bill.
“We know that abandoned properties drive down the value on surrounding homes, and invite crime into our communities,” said Senator Lesniak. “Rather than live with abandoned, foreclosed properties as a fact of life, this bill would create a mechanism to transform dilapidated properties into livable homes, and transform decaying communities into thriving ones. It doesn’t get any better than that.”
The second bill in the package, S-2202, which was approved by a vote of 9-4, would require the HMFA 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’ve fallen on hard times, but who 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, it 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.
“With more homeowners in danger of losing their homes than almost anywhere else in the country, for the State to squander the opportunity to use federal funds to help those homeowners stay in their homes is unconscionable,” said Senator Lesniak. “The ‘Hardest Hit Fund’ is a tool to help homeowners weather the current foreclosure crisis, and considering that the funds in question are 100 percent from the federal government, there is really no excuse in delaying the full potential of the NJ HomeKeeper program. We need to put these federal dollars to good use for struggling homeowners in the Garden State.”
In addition to the two bills approved by the Budget Committee today, Senator Lesniak sponsored S-2156, which would create an expedited foreclosure procedure for abandoned, foreclosed properties which had fallen into disrepair. To qualify for expedited foreclosure consideration, a home must be vacant and abandoned, and meet at least two other conditions of proof to show that it has fallen into a state of disrepair. Senator Lesniak said the goal is to reduce a process which can take up to a year in most foreclosure cases, and compact that into a few months for homes that are abandoned and a blight on the rest of the neighborhood. S-2156 was unanimously approved by the Senate Economic Growth Committee in August.
“If New Jersey is going to put the current foreclosure crisis behind us, then we need a multi-pronged approach to address the factors that contribute to the crisis in the Garden State,” said Senator Lesniak. “We need to clean up foreclosed properties and put them back to use as affordable and market-rate homes for our State’s residents, and we need to do more to help homeowners who are on the brink of foreclosure to stay in their homes. I hope the Governor will see the light on this issue, and support my efforts to create new housing opportunities for our residents and keep New Jerseyans in their homes.”
All three bills now head to the full Senate for consideration.