TRENTON – Legislation sponsored by Senator Ronald L. Rice to require that a property with an affordable housing deed restriction remain as an affordable unit even if the property is foreclosed on was approved unanimously by the Senate Community and Urban Affairs Committee today.
The failure of subprime mortgage lenders to exercise adequate underwriting due diligence for their loans has resulted in a huge increase in foreclosures nationwide as well as panic in the nation’s financial markets,” said Senator Rice, D-Essex. “New Jersey is experiencing foreclosure activity that ranks higher than the national average. Many of the units currently in foreclosure were part of an affordable housing program, and if we do not act fast on this legislation, we will lose even more affordable housing units in our State.”
The bill, S-1622, would seek to prohibit the elimination of affordability controls on residential housing units that are the subject of a foreclosure proceeding.
Senator Rice noted that the bill would also require that any lender seeking to foreclose on a property, in which an affordability control applies, provide 30 days prior notice of this action to the municipal clerk in which the property is located and the Department of Community Affairs (DCA).
According to Senator Rice, “Under the bill, lender must provide to the homeowner in foreclosure with name, address and telephone number of the local affordable housing manager and the New Jersey Housing and Mortgage Finance Agency within the 30 day foreclosure notice, so that residents can attempt to seek financial counseling.”
“Many homes reserved for occupancy by low and moderate income households risk being placed out of that category by foreclosing lenders through the elimination of deed restrictions which ordinarily require such properties to be sold only to income-qualified households,” said Senator Rice. “These deed restrictions are used to meet affordable housing quotas and are required in order to receive government sponsored mortgage lending funds.”
The bill now heads to the full Senate for consideration.
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