Governor Signs Legislation to Combat NJ Worst-in-Nation Foreclosure Crisis
On April 29, 2019, legislation was passed through which the Governor vowed to end the New Jersey foreclosure crisis.
“The foreclosure crisis has hurt our economy and jeopardized economic security of too many New Jersey families,” said Governor Murphy. “Our communities cannot succeed while vacant or foreclosed homes sit empty or while families live in limbo. I am proud to sign these bills into law today and get New Jersey closer to ending the foreclosure crisis.”
New Jersey leads the nation in active foreclosures. New Jersey has the double the national average of active foreclosures. RealtyTrac reported in March that 1 in every 1,006 homes is in foreclosure.
One new law (S3411
) requires serving a Notice of Intent to Foreclose 180 days before filing a foreclosure. https://www.njleg.state.nj.us/2018/Bills/S3500/3411_R2.PDF. The required notice must include information about the Foreclosure Mediation Program. This is designed to give more time for homeowners to correct course and work with their servicer to modify loans before they end up in court. For homeowners who have had a foreclosure initiated, the foreclosure mediation program is available, which has become permanent. Importantly, servicers need to have a person with settlement authority present during mediation sessions and servicers are now required to be licensed and are subject to oversight from the Commissioner of Banking and Insurance. Similarly, all servicers must have a local in-State representative to handle issues with code violations or active foreclosures. The Act also contains many provisions aimed at speeding up the foreclosure process, from shortening the available number of adjournments to permitting Special Masters to handles sales. But, homeowners facing sheriff’s sales going forward will have two 30-day adjournments totaling 60-days before having to go before a judge to put off a sale.
S3411 – 180 Day Notice of Intent to Foreclose – requires lenders to serve a Notice of Intent to Foreclose at least 180 days before commencing a foreclosure action.
Limits reinstatements of an action dismissed without prejudice for lack of prosecution to 3. Fee to reinstate is 2x the amount of the filing of a foreclosure complaint. No portion of a reinstatement fee may be passed on to a debtor
A664 – Foreclosure Mediation Program – codifies the New Jersey Foreclosure Mediation Program. To get into Foreclosure Mediation, you must submit the paperwork within 60 days of being served with a Summons and Complaint. The Foreclosure Mediation program is now permanent.
New Jersey Housing and Mortgage Finance Agency (NJHMFA)
Executive Director Charles A. Richman stated, "We know housing counseling works. Counseled homeowners are nearly three times as likely to have their loans modified, and 70 percent more likely to remain current after modification. That why we have heavily invested our efforts on working to get families the counseling help they need.”
Mediation now available to multi-family homes and 2nd homes where immediate family members of the borrower reside.
Mediation now requires that a person with settlement authority be present at all mediation sessions.
There is now a civil penalty of $1,000 for a bank’s failure to appear.
A4997 – Mortgage Servicing Licensing Act – requires mortgage servicers to register and provide financial disclosures. The “Act” requires the servicer to operate “honestly, fairly and efficiently.” The state banking commissioner has the power under Sec. 16 to enter an Order for a violation the Act (including financially harming consumers). Such a violation can be charged as a 3rd degree crime, carries a civil penalty of $25,000 per violation. The enforcement of the Act can be carried out by the Attorney General’s Office, Division of Consumer Affairs, in the Department of Public Safety.
Each mortgage servicer now must obtain a license from the Commissioner of Banking & Insurance. Initial application fee is $1K per Servicer and annual renewals are $3K per Servicer.
Under the legislation, the state banking commissioner would be empowered to investigate mortgage servicers and suspend, revoke, or refuse to renew a servicer’s license.
A4999 – Creditor Representative Contact – requires mortgage servicers to designate an in-person creditor representative contact for any lender/servicer filing a summons and complaint in foreclosure in New Jersey. This contact is designated to receive property maintenance and code violations, to interface with municipal authorities. For every summons and complaint the Servicer must designate such an individual with the filing.
A5001 – 6-Year Statute of Limitations – the statute of limitations in residential foreclosure actions is now 6-years from the date of default instead of 20-years from the date of default.
One wrinkle here is that the new SOL only applies to mortgages executed on or after the effective date of 4/29/19.
A5002 – Condominium Assessment Priorities – the six-month priority for Condominium Assessments is codified with particularity, but certain limitations are included, such as the prohibition of using only late fees & attorney’s fess to qualify.
S3413 – Vacant and Abandoned Properties – provides a summary procedure to expeditiously handle foreclosures of abandoned properties.
S3416 – Out-of-State New Jersey Residential Mortgage Lending Act – out-of-state mortgage lenders have to comply with the licensure requirements of the Act.
S3464 – Limitation on Sheriff’s Sale Adjournments – The number of Sheriff’s Sale adjournments is limited to two (2) on behalf of borrower, two (2) on behalf of the lender, and one (1) by consent, and no more! Any further adjournments need to be made by Order of a trial court judge.
Requires sheriff to conduct sale within 150 days of receiving Writ of Execution (permits special master application if sheriff is not able to do so).
Limits adjournments to no more than 30 calendar days whether imposed by sheriff or by court order. The problem with this is banks could take this to preclude review under the conflicting 37-day loss mitigation rule of 12 CFR 1024.41.
Increases borrower adjournments from 28 days (2 two-week adjournments) to 60 days (2 30-day adjournments). Forseeably, this is the one and only opportunity to force full modification/loss mitigation review in compliance with 12 CFR 1024.41.
Future Foreclosure Changes
Legislators have indicated that the work is not done and there will be more legislative changes to follow. “Sadly, for too long our state has led the nation in foreclosures, with 70,000 properties going through the process in 2017 alone. Recognizing this problem, Chief Justice Rabner impaneled a blue-ribbon committee encompassing the public, private and non-profit sectors to craft solutions, both legislative and regulatory, that were both fair and responsible to our state's residents and housing economy. I was privileged to serve and be a part of the solution,” said Assembly Speaker Craig Coughlin. “The nine bills signed into law today are the first of many steps we’ll take to address foreclosure process concerns in the state. More efficiency and ensuring fairness in the current system protects the interests of our homeowners, our neighborhoods and communities.”
#NJForeclosureChanges, #SOL, #ForeclosureMediation, #60-DaySheriffAdjournment, #ServicingReform Read more...
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Category: Foreclosure Law
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