TRENTON – In the Assembly Financial Institutions and Insurance Committee meeting, Senator Ronald L. Rice today said that the number residents who are losing their homes because of higher mortgage payments has reached an epidemic proportion and he is drafting a measure to re-finance sub prime mortgages for borrowers who can no longer afford their rising interest rates.
The most immediate thing we in government can do in the midst of this crisis is to provide re-financing assistance,” said Senator Rice, D-Essex.
“Owning a home is part of the American Dream and we in government have argued that increasing the number of homeowners is good for our economy. I feel that owning your own home helps reduce crime and combats the problem of blighted neighborhoods. Unfortunately, many new Jersey homeowners have found themselves in financial troubles because of rising interest rates and changes to the housing market.
According to Senator Rice, “More people are making late mortgage payments, missing payments altogether and going into foreclosure. New Jersey’s reliance on sub prime mortgages is increasing the state’s real-estate downturn and causing an increase in mortgage delinquencies. It’s my goal to quickly introduce and get signed into law a bill to assist New Jersey families who are facing foreclosure.”
Senator Rice noted that a sub prime loan is usually provided to borrowers with low credit scores who are often minorities and urban homeowners.
Senator Rice stated that in order to get more people to buy homes, many mortgage offered very low initial interest rates called “teasers” and then after 2 or 3 years suddenly spiked to much higher, often unaffordable rates of interest.
“I was startled to learn that in some neighborhoods of Newark, as many as one half of all the loans written fall within this sub prime category,” said Senator Rice. “I am concerned for these homeowners because over the next year a number of these loans that had low ‘teaser’ rates or even sub prime loans will move from a fixed rate to an adjustable rate. When these interest rates change the financial pain inflicted on these working families will be substantial. The only option for many of these families will be to try and re-finance these loans.”
Senator Rice stated that he believes the State needs to step up and provide assistance for these struggling working families. “I have asked that the Office of Legislative Services draft a bill to accomplish this goal by mirroring Ohio’s law,” Senator Rice said.
According to Senator Rice, New Jersey may require more bond funding than Ohio. Currently the State of Ohio has directed their Mortgage Financing Agency to issue about $100 million worth of bonds to provide refinance the mortgages for the victims of this sub-prime market collapse, noted Senator Rice.
“New Jersey needs to consider the same sort of action and provide the same sort of relief,” said Senator Rice. “We as a state cannot turn our backs on the many working families, a large number of whom happen to be my constituents, who find themselves facing foreclosure.”