Ensures Mt. Laurel Obligations Are Met By Municipalities
TRENTON – Legislation sponsored by Senator Ronald L. Rice that would protect the deed restrictions on affordable housing from being extinguished by foreclosure proceedings was approved today by the Senate. It would amend the foreclosure law and close loopholes that could result in fewer low- and moderate-income properties across the state.
“Last year, largely because of our state’s lengthy home foreclosure process, New Jersey finalized nearly 70,000 pending proceedings and led the country in number of foreclosures. It’s heartbreaking to know so many families are losing their homes,” said Senator Rice (D-Essex). “But the situation is compounded when affordable housing properties go into foreclosure and are then stripped of the deed restriction that ensures their affordability. In times like this, when more and more New Jersey residents are faced with difficult economic conditions, we need more affordable housing protections, not less.”
The bill, S-362, would amend the foreclosure law to require notice be given to the municipal clerk and the Commissioner of Community Affairs whenever a debtor is given notice that a foreclosure is pending on residential property that is a unit of affordable housing subject to affordability controls. The bill would require a creditor serving a “Notice of Intention to Foreclose” on an affordable housing unit to serve a copy of the notice on the municipal affordable housing liaison, if one has been appointed.
Under the bill, the foreclosing lender would also be required to furnish the debtor with the address and phone number of the municipal affordable housing manager and the New Jersey Housing and Mortgage Finance Agency. It would remove the ability of a foreclosing lender to use alternative methods of foreclosure not requiring a public sale when the housing unit involved is subject to affordability controls.
As part of the affordable housing constitutional obligation resulting from the Mt. Laurel decision, New Jersey is required to reserve a percentage of homes for low- and moderate-income households with deed restrictions that ensure that affordable housing obligations are consistent throughout the State and that they are preserved. However, under current regulations, these deed restrictions are permitted to be extinguished during foreclosure proceedings. Given that a significant portion of properties under foreclosure are also a part of affordable housing obligations, the removal of these deed restrictions is inconsistent with the constitutional mandate to provide affordable housing throughout the state.
The Senate approved the bill with a vote of 37-0.