New Jersey saw 53,652 foreclosure filings in 2007, a 34% increase over 2006. Nationwide, over 2.2 million foreclosure filings, including default notices, auction sales notices and bank repossessions were also reported on 1.3 million properties in 2007, a 75% increase over the prior year. According to published reports, foreclosure rates in February, 2008 were up 60% nationally over last year.

Camden, Newark and Edison were among the 50 US metropolitan areas with the highest foreclosure rates in 2006 and conditions just kept getting worse. U.S. Senate Joint Economic Committee. “Sheltering Neighborhoods from the Subprime Foreclosure Storm” Special report by the Joint Economic Committee, April, 2007.

This bill offers direct aid to homeowners and borrowers because of mortgage rates that are about to reset. Under the new law, the homeowners continue making their lower monthly payment while staying in their home. The lender receives the monthly payment, the homes aren’t abandoned and families don’t have to suffer the stress of relocation, all without taxpayer dollars. Homeowners who have an introductory rate mortgage, and who are facing an interest rate reset are given the opportunity to continue their payments at the much lower pre-set rate for up to three years.

Lenders are now required to notify qualified homeowners when the introductory rate is set to expire. Written notification is required 60 and 30 days before the expiration of the introductory rate and the return to the variable rate mortgage. The notice must disclose, in plain language:

• the current interest rate
• the date on which the interest re-sets
• an explanation on how the reset rate and the monthly payment are determined
• an estimated monthly payment based on the reset rate
• an alternative the homeowner may pursue before the reset, including any refinancing or renegotiation terms offered by the lender.

For those mortgagors whose cases have yet to reach the final foreclosure judgment stage, the law now prevents a decision from being rendered unless the lender has offered the three-year window to keep making payments at the pre-reset rate.

There are several benefits being offered to protect the lenders offering the three year extension:

1. Mortgage modification, consisting of any arrearage on the principal and interest payments at the pre-reset rate and any costs or fees due to the lender – such as property taxes or insurance, without interest being charged.
    
2. Allowing mortgagors to remain in their homes helps municipalities by keeping the properties in question on the tax rolls, helping to preserve local financial resources while saving the municipalities the burden of maintaining
   abandoned and unused properties that could become safety hazards and eyesores in the community.
    
3. The legislation benefits mortgage lenders by providing them with a continuing revenue source. Lenders do not want to become real estate owners and add to the continuing downturn in our economy.

The State Foreclosure Prevention Working Group, an amalgam of banking regulators and attorneys general from 11 states, including New Jersey issued a report in April, 2008 that the combined efforts of mortgage lenders and government intervention has failed to slow the rate of foreclosure.

It is the hope of the Assembly members, Gary S. Schaer, Bonnie Watson Coleman, L. Grace Spencer and L. Harvey Smith, the sponsors of the above Act that foreclosure protection will be afforded to thousands of New Jersey families caught-up in the recent mortgage upheaval.

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