Bill Text: NJ S2926 | 2024-2025 | Regular Session | Introduced
Bill Title: Enhances access to certain foreclosure counseling services.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-03-07 - Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee [S2926 Detail]
Download: New_Jersey-2024-S2926-Introduced.html
Sponsored by:
Senator JOSEPH P. CRYAN
District 20 (Union)
SYNOPSIS
Enhances access to certain foreclosure counseling services.
CURRENT VERSION OF TEXT
As introduced.
An Act expanding access to foreclosure counseling services, amending P.L.1995, c.244 and P.L.2021, c.373, and supplementing P.L.2019, c.64 (C.2A:50-74 et al.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 4 of P.L.1995, c.244 (C.2A:50-56) is amended to read as follows:
4. a. Upon failure to perform any obligation of a residential mortgage by the residential mortgage debtor and before any residential mortgage lender may accelerate the maturity of any residential mortgage obligation and commence any foreclosure or other legal action to take possession of the residential property which is the subject of the mortgage, the residential mortgage lender shall give a notice of intention, which shall include a notice of the right to cure the default as provided in section 5 of P.L.1995, c.244 (C.2A:50-57), at least 30 days, but not more than 180 days, in advance of such action as provided in this section, to the residential mortgage debtor, and, if the mortgage is secured by a residence for which a restriction on affordability was recorded in the county in which the property is located, the clerk of the municipality in which the subject property is located, the municipal housing liaison, if one has been appointed by the municipality pursuant to the regulations of the Council on Affordable Housing, and the Commissioner of Community Affairs. For the purposes of this section, "restriction on affordability" means any conditions recorded with a mortgage or a deed which would limit the sale of such property to income qualified households pursuant to the rules adopted to effectuate the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.).
b. Notice of intention to take action as specified in subsection a. of this section shall be in writing, provided to the Department of Community Affairs in accordance with subsection a. of section 2 of P.L.2019, c.134 (C.46:10B-49.2), sent to the debtor by registered or certified mail, return receipt requested, at the debtor's last known address, and, if different, to the address of the property which is the subject of the residential mortgage. The notice is deemed to have been effectuated on the date the notice is delivered in person or mailed to the party.
c. The written notice shall clearly and conspicuously state in a manner calculated to make the debtor aware of the situation:
(1) the particular obligation or real estate security interest;
(2) the nature of the default claimed;
(3) the right of the debtor to cure the default as provided in section 5 of P.L.1995, c.244 (C.2A:50-57);
(4) what performance, including what sum of money, if any, and interest, shall be tendered to cure the default as of the date specified under paragraph (5) of this subsection c.;
(5) the date by which the debtor shall cure the default to avoid initiation of foreclosure proceedings, which date shall not be less than 30 days after the date the notice is effective, and the name and address and phone number of a person to whom the payment or tender shall be made;
(6) that if the debtor does not cure the default by the date specified under paragraph (5) of this subsection c., the lender may take steps to terminate the debtor's ownership in the property by commencing a foreclosure suit in a court of competent jurisdiction;
(7) that if the lender takes the steps indicated pursuant to paragraph (6) of this subsection c., a debtor shall still have the right to cure the default pursuant to section 5 of P.L.1995, c.244 (C.2A:50-57), but that the debtor shall be responsible for the lender's court costs and attorneys' fees in an amount not to exceed that amount permitted pursuant to the Rules Governing the Courts of the State of New Jersey;
(8) the right, if any, of the debtor to transfer the real estate to another person subject to the security interest and that the transferee may have the right to cure the default as provided in P.L.1995, c.244 (C.2A:50-53 et seq.), subject to the mortgage documents;
(9) that the debtor is advised to seek counsel from an attorney of the debtor's own choosing concerning the debtor's residential mortgage default situation, and that, if the debtor is unable to obtain an attorney, the debtor may communicate with the New Jersey Bar Association or Lawyer Referral Service in the county in which the residential property securing the mortgage loan is located; and that, if the debtor is unable to afford an attorney, the debtor may communicate with the Legal Services Office in the county in which the property is located;
(10) the possible availability of financial assistance for curing a default from programs operated by the State or federal government or nonprofit organizations, if any, as identified by the Commissioner of Banking and Insurance and, if the property is subject to restrictions on affordability, the address and phone number of the municipal affordable housing liaison and of the New Jersey Housing and Mortgage Finance Agency. This requirement shall be satisfied by attaching a list of such programs promulgated by the commissioner;
(11) the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact if the debtor disagrees with the lender's assertion that a default has occurred or the correctness of the mortgage lender's calculation of the amount required to cure the default;
(12) that if the lender takes the steps indicated pursuant to paragraph (6) of this subsection, the debtor has the option to participate in the Foreclosure Mediation Program following the filing of a mortgage foreclosure complaint by initiating mediation pursuant to paragraph (2) of subsection a. of section 4 of P.L.2019, c.64 (C.2A:50-77). Notice of the option to participate in the Foreclosure Mediation Program shall adhere to the requirements of section 3 of P.L.2019, c.64 (C.2A:50-76) and any court rules, procedures, or guidelines adopted by the Supreme Court;
(13) that the debtor is entitled to housing counseling, at no cost to the debtor, through the Foreclosure Mediation Program established by the New Jersey Judiciary, including information on how to contact the program, and that the debtor is entitled to access housing counseling services regardless of whether the debtor intends to participate in foreclosure mediation;
(14) that if the property which is the subject of the mortgage has more than one dwelling unit but less than five, one of which is occupied by the debtor or a member of the debtor's immediate family as the debtor's or member's residence at the time the loan is originated, and is not properly maintained and meets the necessary conditions for receivership eligibility, established pursuant to section 4 of the "Multifamily Housing Preservation and Receivership Act," P.L.2003, c.295 (C.2A:42-117), the residential mortgage lender shall file an order to show cause to appoint a receiver; and
(15) that the lender is either licensed in accordance with the "New Jersey Residential Mortgage Lending Act," sections 1 through 39 of P.L.2009, c.53 (C.17:11C-51 through C.17:11C-89) or exempt from licensure under the act in accordance with applicable law.
d. The notice of intention to foreclose required to be provided pursuant to this section shall not be required if the debtor has voluntarily surrendered the property which is the subject of the residential mortgage.
e. The duty of the lender under this section to serve notice of intention to foreclose is independent of any other duty to give notice under the common law, principles of equity, State or federal statute, or rule of court and of any other right or remedy the debtor may have as a result of the failure to give such notice.
f. Compliance with this section and subsection a. of section 2 of P.L.2019, c.134 (C.46:10B-49.2) shall be set forth in the pleadings of any legal action referred to in this section. If the plaintiff in any complaint seeking foreclosure of a residential mortgage alleges that the property subject to the residential mortgage has been abandoned or voluntarily surrendered, the plaintiff shall plead the specific facts upon which this allegation is based.
g. If more than 180 days have elapsed since the date the notice required pursuant to this section is sent, and any foreclosure or other legal action to take possession of the residential property which is the subject of the mortgage has not yet been commenced, the lender shall send a new written notice at least 30 days, but not more than 180 days, in advance of that action.
h. If the property which is the subject of the notice of intention to foreclose has more than one dwelling unit but less than five, one of which is occupied by the debtor or a member of the debtor's immediate family as the debtor's or member's residence at the time the loan is originated, and is not properly maintained and meets the necessary conditions for receivership eligibility, established pursuant to section 4 of the "Multifamily Housing Preservation and Receivership Act," P.L.2003, c.295 (C.2A:42-117), the residential mortgage lender shall file an order to show cause to appoint a receiver.
i. No later than one business day following the provision of the notice of intention to foreclose, the lender shall notify the New Jersey Housing and Mortgage Finance Agency, in accordance with the rules and regulations adopted by the agency pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), for the purpose of facilitating the housing counseling outreach required pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.2019, c.134, s.4)
2. Section 1 of P.L.2021, c.373 (C.2A:50-81) is amended to read as follows:
1. The Legislature finds and declares that:
a. The Foreclosure Mediation Assistance Program administered by the New Jersey Housing and Mortgage Finance Agency provides trained foreclosure prevention and default mitigation counselors for homeowner-borrowers [participating] as a prerequisite to participation in the Foreclosure Mediation Program established by the New Jersey Judiciary, and to other homeowner-borrowers facing foreclosure, regardless of whether a homeowner-borrower intends to participate in foreclosure mediation.
b. As provided by section 7 of the "New Jersey Foreclosure Mediation Act," P.L.2019, c.64 (C.2A:50-80), trained foreclosure prevention and default mitigation counselors are paid using a portion of funds paid by a foreclosure plaintiff in an action for foreclosure.
c. During the public health emergency declared by the Governor in Executive Order No. 103 of 2020 due to the coronavirus disease 2019 (COVID-19) pandemic, the New Jersey Housing and Mortgage Finance Agency expanded its Foreclosure Mediation Assistance Program to provide other supports to New Jersey residents including renter and pre-foreclosure counseling.
d. Since the expansion began, nearly 5,000 households have been served.
e. Sufficient funding exists for trained foreclosure prevention and default mitigation counselors to continue to provide pre-foreclosure counseling services although the public health emergency declared by the Governor in Executive Order No. 103 of 2020 has concluded.
f. In the event of a declaration of a state of emergency, persons who have been trained to provide foreclosure counseling services under the Foreclosure Mediation Assistance Program are well positioned to help disaster victims prepare and submit applications for State and federal disaster assistance.
(cf: P.L.2023, c.123, s.1)
3. Section 2 of P.L.2021, c.373 (C.2A:50-82) is amended to read as follows:
2. a. There is established in the General Fund a separate, non-lapsing, dedicated account administered by the Department of Community Affairs to be known as the "New Jersey Foreclosure Counseling Fund."
b. The funds within the New Jersey Foreclosure Counseling Fund shall be paid to the New Jersey Housing and Mortgage Finance Agency no later than the 15th day of each quarter to reimburse trained foreclosure prevention and default mitigation counselors for costs expended thereby in:
(1) providing pre-foreclosure counseling services in accordance with guidance established by the New Jersey Housing and Mortgage Finance Agency and for the agency's services required under P.L.2019, c.64 (C.2A:50-74 et [seq.)] al.), including, but not limited to, services provided as a prerequisite to participation in foreclosure mediation; [and]
(2) providing, to homeowners and renters who have been impacted by real property damage to, or destruction on, their primary residence, as a result of an event that prompted the Governor or the President of the United States to declare a state of emergency or issue an emergency disaster declaration, assistance in the preparation and submission of applications for housing related expenses, including, but not limited to: (a) rental payments; (b) mortgage payments; (c) insurance payments; (d) property tax payments; and (e) repair, rehabilitation, or relocation assistance payments that have been made available, by the State or federal government, in response to the declared emergency or disaster; and
(3) offering counseling services to homeowner-borrowers facing foreclosure, regardless of whether a homeowner-borrower intends to participate in foreclosure mediation.
c. The New Jersey Housing and Mortgage Finance Agency may assess up to five percent of New Jersey Foreclosure Counseling Fund's annual allocation amounts for administrative costs.
d. For purposes of this section, "trained foreclosure prevention and default mitigation counselors" shall have the same definition as in section 2 of the "New Jersey Foreclosure Mediation Act," P.L.2019, c.64 (C.2A:50-75).
(cf: P.L.2023, c.123, s.2)
4. (New section) When the New Jersey Housing and Mortgage Finance Agency is notified, pursuant to subsection i. of section 4 of P.L.1995, c.244 (C.2A:50-56), that a residential mortgage lender has provided a homeowner-borrower with a notice of intention to foreclose, the agency shall ensure that a trained foreclosure prevention and default mitigation counselor promptly and diligently contacts the homeowner-borrower, to offer counseling services to the homeowner-borrower.
5. On or before the first day of the fourth month next following enactment, the Executive Director of the New Jersey Housing and Mortgage Finance Agency shall, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
6. This act shall take effect immediately, but its provisions shall remain inoperative until the first day of the fourth month next following enactment.
STATEMENT
This bill is intended to enhance access to financial counseling services for homeowners facing foreclosure.
Under existing law, a homeowner facing foreclosure is required to engage in financial counseling as a prerequisite for participating in foreclosure mediation services offered by the Judiciary. These existing counseling services are funded by the "New Jersey Foreclosure Counseling Fund" (counseling fund), administered by the New Jersey Housing and Mortgage Finance Agency (HMFA).
This bill would expressly provide that the financial counseling services would be offered through the counseling fund to homeowners facing foreclosure, regardless of whether a homeowner intends to participate in foreclosure mediation. The bill would further provide that, whenever a residential mortgage lender provides a homeowner with a notice of intention to foreclose, no later than one business day following that action, the lender would also be required to notify HMFA, for the purpose of facilitating housing counseling outreach. Upon receiving this notice, the bill requires HMFA to ensure that a trained foreclosure prevention and default mitigation counselor promptly and diligently contacts the homeowner to offer counseling services.
The bill takes effect on the first day of the fourth month following enactment, and directs HMFA to adopt rules and regulations to effectuate the provisions of the bill on or before the effective date.
