Bill Text: NJ A5595 | 2022-2023 | Regular Session | Introduced
Bill Title: Expands certain State programmatic interventions related to residential foreclosures.
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Passed) 2023-06-30 - Approved P.L.2023, c.76. [A5595 Detail]
Download: New_Jersey-2022-A5595-Introduced.html
Sponsored by:
Assemblywoman YVONNE LOPEZ
District 19 (Middlesex)
SYNOPSIS
Expands New Jersey Residential Foreclosure Prevention Program.
CURRENT VERSION OF TEXT
As introduced.
An Act expanding the New Jersey Residential Foreclosure Prevention Program and amending and supplementing P.L.2021, c.34.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.2021, c.34 (C.55:14K-96) is amended to read as follows:
3. As used in P.L.2021, c.34 (C.55:14K-94 et al.):
"Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to section 4 of P.L.1983, c.530 (C.55:14K-4).
"Community development corporation" means a nonprofit community development corporation established pursuant to Title 15 or 15A of the Revised Statutes of New Jersey, or other law of this State, with a focus on producing and operating affordable housing or housing with on-site social services for individuals with special needs.
"Community development financial institution" means an entity designated and certified by the United States Department of the Treasury as a Community Development Financial Institution pursuant to 12 CFR Part 1805.
["Contractor"] "Foreclosure intervention contractor" means a [qualified] community development financial institution or other non-profit entity with experience conducting dwelling rehabilitation, mortgage servicing and underwriting, financing and acquisition of real estate for affordable housing, or community development work that enters into a contract or loan with the agency pursuant to section 5 of P.L.1983, c.530 (C.55:14K-5).
"Eligible property" means any residential property or mortgage note that is owned by an institutional lender as the result of a mortgage foreclosure judgment or a deed in lieu of foreclosure, is by a municipality as the result of a tax foreclosure judgment or is subject to a nonperforming loan from an institutional lender.
["Fund" means the Foreclosure Intervention Fund, established pursuant to section 4 of P.L.2021, c.34 (C.55:14K-97).]
"Institutional lender" or "lender" means any lawfully constituted mortgage lender, mortgage investor, or mortgage loan servicer that owns an eligible property, including, but not limited to, any agency or instrumentality of the United States or the State, including, but not limited to, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Federal Housing Administration, the Small Business Administration, the Resolution Funding Corporation, and the Federal Deposit Insurance Corporation.
["Intercreditor agreement" means an agreement among creditors that sets forth the various lien positions and the rights and liabilities of each creditor and its impacts on the other creditors.]
"Program" means the "New Jersey Residential Foreclosure Prevention Program" established pursuant to section 4 of P.L.2021, c.34 (C.55:14K-97).
["Qualified community development financial institution" means a community development financial institution that has a minimum of $50,000,000 in assets and a minimum of two years' experience in the financing and acquisition of real estate for affordable housing.]
"Rehabilitation" means the repair, reconstruction, or renovation of the interior or exterior of a residential dwelling which renders a previously vacant and abandoned dwelling safe, sanitary, and decent for residential purposes.
"Vacant and abandoned" means the same as the term is defined under subsections a. and b. of section 1 of P.L.2012, c.70 (C.2A:50-73).
(cf: P.L.2021, c.34, s.3)
2. Section 4 of P.L.2021, c.34 (C.55:14K-97) is amended to read as follows:
4. a. There is established in the agency the "New Jersey Residential Foreclosure Prevention Program," which shall be subject to the powers of the agency, as designated pursuant to section 5 of P.L.1983, c.530 (C.55:14K-5). The goal of the program is to ensure that loss mitigation and foreclosure prevention measures are taken on eligible properties. Either directly, or through its foreclosure intervention contractors, the agency may purchase eligible properties and mortgage assets in furtherance of this goal, pursuant to section 5 of P.L.2021, c.34 (C.55:14K-98).
b. The agency in furtherance of the program may enter into contracts with any person, corporation, or entity which the agency determines to be necessary or appropriate to carry out its responsibilities under P.L.2021, c.34 (C.55:14K-94 et al.). Such contracts shall be subject to the procedures adopted pursuant to section 5 of P.L.2021, c.34 (C.55:14K-98). All contracts entered into in furtherance of the program shall be governed by the laws of the State and shall provide for indemnification of the agency.
c. In carrying out the agency's duties under P.L.2021, c.34 (C.55:14K-94 et al.), the agency may employ the consulting services of real estate and loan portfolio asset management firms, property management firms, auction marketing firms, brokerage services firms, appraisers, and such other consultants and employees required in the judgment of the agency, notwithstanding the provisions of Title 11A of the New Jersey Statutes.
d. Within 180 days following the enactment of P.L.2021, c.34 (C.55:14K-94 et al.), the agency shall adopt a funding plan for the program utilizing the Foreclosure Intervention Fund established pursuant to section 6 of P.L.2021, c.34 (C.55:14K-99). The agency may directly fund the program through revenue generated by the [fund] Foreclosure Intervention Fund. The agency shall have the authority to alter its funding plan as the Executive Director of the agency deems necessary. The funding plan shall include, but not be limited to, program revenue, expected expenditures and projections for the acquisition of foreclosed residential properties or mortgage assets.
e. Within 180 days following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), the agency shall amend the funding plan for the program to incorporate the utilization of the "Foreclosure Rehabilitation Fund" established pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill). The agency may directly fund the purchase and rehabilitation of vacant and abandoned eligible property through revenue generated by the Foreclosure Rehabilitation Fund. The funding plan shall include, but not be limited to, program revenue, expected expenditures and projections for the acquisition and rehabilitation of vacant and abandoned eligible properties or mortgage assets.
(cf: P.L.2021, c.34, s.4)
3. Section 5 of P.L.2021, c.34 (C.55:14K-98) is amended to read as follows:
5. a. (1) The agency may enter into contracts or loans, or both, with [no more than two qualified community development financial institutions] one or more foreclosure intervention contractors to negotiate, bid for, and purchase eligible properties and mortgage assets for the purpose of facilitating the program. In selecting foreclosure intervention contractors [from among qualified community development financial institutions], the agency shall accord a strong preference to [qualified community development financial institutions] entities that have substantial experience in [lending in the State] and substantial knowledge of the State's real estate markets. [The agency may enter into contracts or loans, or both, with a partnership or consortia of organizations, as long as a qualified community development financial institution is the lead entity, or a partnership or consortia of multiple qualified community development financial institutions.]
(2) Should the agency contract with a [community development financial institution] foreclosure intervention contractor for the purposes of section 5 of P.L.2021, c.34 [(C.55:14K-94 et al.)] (C.55:14K-98), the contract shall specify the amounts, schedules, and types of funding to be provided by the agency to the [qualified community development financial institution] foreclosure intervention contractor, the repayment schedule for the portion of that funding to be repaid, and targeted goals for homeowner interventions. The agency may condition funding and goals upon the availability of funds to the program. The contract shall specify reasonable administrative costs sufficient to enable the [qualified community development financial institution] foreclosure intervention contractor to exercise its obligations pursuant to P.L.2021, c.34 (C.55:14K-94 et al.). The contract shall set forth criteria for instances when the purchase, sale, lease, and conveyance of properties furthers the purposes of P.L.2021, c.34 (C.55:14K-94 et al.).
b. All purchases, sales, leases, and conveyances of property by [qualified community development financial institutions] foreclosure intervention contractors exercised pursuant to this section shall be deemed to lessen the burdens of government in furthering the purposes of P.L.2021, c.34 (C.55:14K-94 et al.).
(cf: P.L.2021, c.34, s.5)
4. Section 6 of P.L.2021, c.34 (C.55:14K-99) is amended to read as follows:
6. a. There is established within the agency a Foreclosure Intervention Fund, which shall be a non-lapsing, revolving fund and which shall be the repository for funds appropriated or otherwise made available for the purposes of P.L.2021, c.34 (C.55:14K-94 et al.), and any interest earned thereon. The [fund] Foreclosure Intervention Fund shall be administered by the agency, in accordance with its authority under section 5 of P.L.1983, c.530 (C.55:14K-5) to manage funds for housing programs.
b. The agency may transfer into the [fund] Foreclosure Intervention Fund any amounts held or received by the agency that are needed by the agency or its foreclosure intervention contractors for the purchase of eligible property.
c. The agency may use annually up to five percent of the monies available in the [fund] Foreclosure Intervention Fund for the payment of any necessary administrative costs related to the administration of the program.
d. Revenue generated through the mechanisms established pursuant to N.J.S.2A:17-38 exceeding the funding plan developed pursuant to [subsection] subsections d. and e. of section 4 of P.L.2021, c.34 (C.55:14K-97) may be appropriated by the agency for additional foreclosure prevention programs.
(cf: P.L.2021, c.34, s.6)
5. (New section) a. There is established within the agency a separate, non-lapsing, revolving fund designated as the Foreclosure Rehabilitation Fund which shall be the repository for funds appropriated or otherwise made available to the agency for the purchase and rehabilitation of vacant and abandoned eligible property pursuant to P.L.2021, c.34 (C.55:14K-94 et al.), and any interest earned thereon. The Foreclosure Rehabilitation Fund shall be administered by the agency, in accordance with its authority under section 5 of P.L.1983, c.530 (C.55:14K-5) to manage funds for housing programs.
b. The agency may transfer into the Foreclosure Rehabilitation Fund any amounts held by the agency in the Foreclosure Intervention Fund that are needed by the agency or its contractors for the purchase and rehabilitation of vacant and abandoned eligible property.
c. Revenue generated through the resale of rehabilitated previously vacant and abandoned eligible property shall be deposited into the Foreclosure Rehabilitation Fund for the purposes of the Foreclosure Rehabilitation Fund.
d. Revenue generated through the mechanisms established pursuant to N.J.S.2A:17-38 exceeding the funding plan developed pursuant to subsections d. and e. of section 4 of P.L.2021, c.34 (C.55:14K-97) may be reallocated by the agency for additional foreclosure prevention programs.
6. (New section) A prospective homebuyer enrolled in another home buying assistance program administered by the agency shall receive priority consideration in the purchase of a residential property which has been purchased and rehabilitated with funds allocated from the Foreclosure Rehabilitation Fund established pursuant to section 5 of P.L. . c. (C. ) (pending before the Legislature as this bill).
7. This act shall take effect immediately.
STATEMENT
This bill expands the New Jersey Residential Foreclosure Prevention Program ("program").
Specifically, the bill expands the eligibility of contractors for the program to include non-profit organizations with experience in dwelling rehabilitation and community development work. Currently, the law restricts contractors to community development financial institutions, as defined in N.J.S.A.55:14K-96. The bill also permits the New Jersey Housing and Mortgage Finance Agency ("agency") to contract with more than two contractors, if necessary.
Additionally, the bill establishes a separate revolving fund designated as the Foreclosure Rehabilitation Fund to be the repository for funds made available to the agency for the purchase and rehabilitation of vacant and abandoned eligible property. The bill provides that any revenue generated through the resale of rehabilitated property is to be deposited back into the Foreclosure Rehabilitation Fund for the fund's purposes.
The bill requires that prospective homebuyers using another home buying assistance program administered by the agency, such as down payment assistance or the first time homebuyers mortgage program, receive priority consideration in the resale of a residential property that has been purchased and rehabilitated with funds from the Foreclosure Rehabilitation Fund.
