Jersey Lawmakers Approve Mortgage Relief to Stop Foreclosures

Legislation to helpĀ distressed homeowners refinance their houses or continue to live there as tenants while they reorganize financially has been approved in New Jersey. The Mortgage Stabilization and Relief Act cleared the Assembly and Senate Monday. It now heads to Gov. Jon S. Corzine, who indicated he would quickly sign it into law. The measure dedicates $25 million to mortgage stabilization by providing loans of up to $25,000 to homeowners and lenders willing to extend fixed mortgage refinancing to people in danger of foreclosure.

The bill also creates a $15 million housing recovery program. It helps nonprofits buy dwellings from homeowners who cannot afford their mortgages, then lease the homes back to homeowners for up to seven years while they recover financially. Finally, the legislation puts more on creditors in foreclosure proceedings, making them responsible for code violations if borrowers abandon the property and requiring a six-month hold on foreclosures if the borrower seeks more time to work out a refinancing or short sale. “It would be a failure of leadership to sit idly by and let entire neighborhoods fall overboard,” said Assemblyman Ralph Caputo, a Democrat from Belleville who co-sponsored the bill.

Foreclosures have been rising statewide as the economy stumbles and more people lose their jobs. October saw more foreclosure filings in New Jersey than any single month on record, with more than 5,000 filings recorded. Corzine signed legislation Friday allocating $9.5 million in additional legal aid for people facing foreclosure, bankruptcy and debt collection. The legislation also requires mediation in all contested mortgage foreclosure cases. More and more homeowners are seeking mortgage relief by means of a loan modification in which the lender agrees to lower the monthly payments by reducing the mortgage rate.

The Housing & Community Development Network of New Jersey, a citizen advocacy group, lauded the legislative focus on mortgage aid. “The foreclosure issue has many aspects, and this legislation makes major strides in addressing many of them,” said Diane Sterner, the network’s executive director. The bill creates a housing support fund within the Housing Mortgage and Finance Agency intended to help stabilize neighborhoods hard-hit by foreclosures by helping keep people in their homes.

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