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October 16th, 2008

NJ Battles Foreclosures With Controversial Plan

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In an effort to quell foreclosures in New Jersey, the Garden State has adopted a plan to develop a multi-million dollar trust fund to help subprime homeowners avoid foreclosure. The New Jersey Homeownership Preservation Act was just one of seven bills designed to aid homeowners facing foreclosure advanced by Assembly committees on October 6.

Controversy has arisen in a stipulation that would require that any lender that forecloses on a property pay a $2,000 fee to the state. According to Steven M. Goldman, Commissioner of the New Jersey Department of Banking and Insurance, New Jersey is on track to reach 50,000 foreclosure filings this year alone. The trust fund is predicted to collect between $27 – $33 million, most of which would be used to hire foreclosure-prevention counselors, non-profits to “restore properties,” and a counseling service that would make “emergency foreclosure prevention assistance loans.”

The Homeownership Preservation Act is being cheered by some local government officials and non-profit organizations as essential to foreclosure prevention, but others have proposed that the act will do little to benefit eligible homeowners.

E. Robert Levy, Executive Director of the Mortgage Bankers Association of New Jersey, and Legal Services attorney Rebecca Shore, believe the measure could create an incentive for mortgage bankers to leave the state, and as Shore puts it, “a false sense of hope and no meaningful solution.”

Are these types of foreclosure prevention bills being enacted in your state or community? Let us know if you think these types of solutions are worthwhile.

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2 Responses to “NJ Battles Foreclosures With Controversial Plan”

  1. Rebecca Wilder Says: October 17th, 2008 at 3:42 pm

    Hi Tim,

    The one and only thing that I like about his bill is that it is a state-level bill, rather than a federal-bill. A high percentage of the foreclosures are focused in just several states (California, Nevada, Arizona, Florida, etc.). Shouldn’t those states be forced to clean up at least some of their own mess? It seems to me that while home values were booming in those states, so were property taxes. Interesting that when those states enjoyed higher property tax revenues they did not spread the income across the nation, but when mass foreclosures hit, they want federal funds.

    Thanks for the update – as always! Rebecca

  2. Tim Manni Says: October 17th, 2008 at 4:13 pm

    Hey Rebecca,

    Good points all around. A fact I didn’t include was, according to the Commissioner of the New Jersey Department of Banking and Insurance, NJ’s foreclosure numbers are below the national average. Yet, with filings increasing year to year, the state felt it was necessary to do something. I’m hoping to find out more about potential state programs like this one, even if there are any, in those troubled states you mentioned. I agree with you, states need to start taking more action before their problems grow into national ones.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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