Bill Text: NJ AR250 | 2014-2015 | Regular Session | Introduced
Bill Title: Urges Congress to revise certain mortgage lending practices to protect homeowners from unintended consequences of short sales through Superstorm Sandy Blue Acres Buyout Program.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Passed) 2015-12-17 - Filed with Secretary of State [AR250 Detail]
Download: New_Jersey-2014-AR250-Introduced.html
Sponsored by:
Assemblyman CRAIG J. COUGHLIN
District 19 (Middlesex)
Assemblyman JOHN S. WISNIEWSKI
District 19 (Middlesex)
SYNOPSIS
Urges Congress to revise certain mortgage lending practices to protect homeowners from unintended consequences of short sales through Superstorm Sandy Blue Acres Buyout Program.
CURRENT VERSION OF TEXT
As introduced.
An Assembly Resolution respectfully urging Congress to revise mortgage lending practices of government entities and private lenders in certain situations.
Whereas, The State of New Jersey launched the Superstorm Sandy Blue Acres Buyout Program (Blue Acres Program) in May, 2013, in an effort to give homeowners a chance to move out of areas of the State that were flooded by Superstorm Sandy or previous storms; and
Whereas, The Blue Acres Program involves the State's use of funds, provided by the Federal Emergency Management Agency (FEMA), to purchase and demolish clusters of homes in flood-prone neighborhoods, thereby creating open space, as well as natural buffer areas to handle future flooding; and
Whereas, The Blue Acres Program will utilize $300 million in federal disaster recovery funds from FEMA to purchase up to 1,300 homes, thereby allowing these homeowners to purchase homes in other areas; and
Whereas, In order to participate in the Blue Acres Program, some homeowners, who owe more on their mortgage than the value of their homes because the value of their homes has been reduced by flood damage, enter into a short sale with their mortgage lender, in which the mortgage lender accepts the amount paid through the program as full satisfaction of the mortgage; and
Whereas, Homeowners who participate in the Blue Acres Program through a short sale are subject to an unintended consequence when the short sale has a negative impact on the homeowners' credit history, because the mortgage lender did not receive the full amount owed on the mortgage; and
Whereas, Some homeowners, who otherwise had good credit histories prior to a short sale in connection with a Blue Acres Program buyout, encounter difficulties in obtaining a new mortgage to purchase a new home because the negative credit histories associated with the short sale are taken into account by subsequent mortgage lenders; and
Whereas, Decisions by private mortgage lenders are often affected by the underwriting guidelines issued by federal government entities that insure mortgages or purchase mortgages in the secondary market, and the mortgage lending market is most especially affected by the practices of the Federal National Mortgage Association (commonly known as Fannie Mae), the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac), and the Federal Housing Administration (commonly known as FHA); and
Whereas, Fannie Mae, Freddie Mac, and FHA typically use underwriting guidelines that require a waiting period of two to four years after a short sale before approving a mortgage for a borrower, whether the short sale was conducted as part of the Blue Acres Program or in any other context, and these guidelines are often adopted by private mortgage lenders as well; and
Whereas, The Blue Acres Program provides enormous relief to New Jersey homeowners who need to move from flood-prone areas and homeowners who have otherwise maintained good credit practices should not be penalized through an unintended consequence for participating in a short sale through the program; and
Whereas, It is fitting and appropriate for this House to call upon Congress to take all appropriate actions to revise the mortgage lending practices of Fannie Mae, Freddie Mac, and FHA, as well as private mortgage lenders, to allow homeowners who have participated in the Superstorm Sandy Blue Acres Buyout Program to apply for mortgage financing to buy a new home without consideration of any negative credit history associated with a short sale, provided the homeowner has otherwise maintained a credit history that would qualify them for a mortgage; now, therefore,
Be It Resolved by the General Assembly of the State of New Jersey:
1. This House urges Congress to take all appropriate actions to revise the mortgage lending practices of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Housing Administration, as well as private mortgage lenders, to allow homeowners who have participated in the Superstorm Sandy Blue Acres Buyout Program to apply for mortgage financing to buy a new home without consideration of any negative credit history associated with a short sale, provided the homeowner has otherwise maintained a credit history that would qualify them for a mortgage.
2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Clerk of the General Assembly to the Majority and Minority Leaders of the United States Senate, the Majority and Minority Leaders of the United States House of Representatives, and each member of Congress elected from this State.
STATEMENT
This resolution urges Congress to take all appropriate actions to revise the mortgage lending practices of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Housing Administration, as well as private mortgage lenders, to allow homeowners who have participated in New Jersey's Superstorm Sandy Blue Acres Buyout Program (Blue Acres Program) to apply for mortgage financing to buy a new home without consideration of any negative credit history associated with a short sale, provided the homeowner has otherwise maintained credit history that would qualify them for a mortgage.
Some homeowners, who otherwise had good credit histories prior to a short sale in connection with a Blue Acres Program buyout, encounter difficulties in obtaining a new mortgage to purchase a new home because the negative credit histories associated with the short sale are taken into account by subsequent mortgage lenders.
The Blue Acres Program provides enormous relief to New Jersey homeowners who need to move from flood-prone areas and homeowners who have otherwise maintained good credit practices should not be penalized through an unintended consequence for participating in a short sale through the program.
