S1821

An Act providing relief from mortgage foreclosure for owners of real property that was damaged by “Superstorm Sandy.”

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. For the purposes of P.L. , c. (pending before the Legislature as this bill):

“Forbearance” means a period of 36 months from the issuance of a certification of eligibility for the forbearance under this section, or no more than 60 days after a certificate of occupancy is issued for the property, if one was not issued on the effective date of P.L. , c. (pending before the Legislature as this bill), whichever is sooner, during which the payment of mortgage and interest obligations are suspended.

“Commissioner” means the Commissioner of Community Affairs.

“Department” means the Department of Community Affairs.

“Mortgage” means a mortgage, trust deed, or other security in the nature of a residential mortgage.

"Recovery and rebuilding program" means the use of funding provided by the federal government through the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) program or the Low-to-Moderate Income (LMI) Homeowner’s Rebuilding Program, which are intended to help individuals rebuild and recover from Superstorm Sandy.

“Residential property” means any residential property damaged by “Superstorm Sandy” and eligible for funding through a recovery and rebuilding program, including, but not limited to, single-family and manufactured homes.

“Superstorm Sandy” means the major storm that made landfall in New Jersey on October 29, 2012.

b. A homeowner eligible, as determined by the commissioner, for the receipt of funds through a recovery and rebuilding program with respect to a residential property secured by a mortgage which was damaged as a result of “Superstorm Sandy” also shall be eligible for a forbearance of mortgage and interest obligations if foreclosure proceedings have not been initiated for failure to pay mortgage obligations as of the effective date of P.L. , c. (pending before the Legislature as this bill). An eligible homeowner shall apply to the commissioner, on forms to be provided by the department, for a certification of eligibility for the forbearance under this section before the first day of the seventh month next following the enactment of P.L. , c. (pending before the Legislature as this bill). The application shall be approved or denied within 30 days of its delivery to the commissioner. If the application is not approved or denied within 30 days of its delivery, the application shall be deemed approved.

c. Notwithstanding the provisions of any law, rule or regulation to the contrary, the repayment period of any mortgage subject to the forbearance established in subsection b. of this section shall be extended by the number of months the forbearance is in effect. During the time of the forbearance and during the period constituting an extension of the mortgage, the interest rate shall be the same rate as agreed upon in the original mortgage, and there shall be no fees assessed for the forbearance, or penalty for early repayment.

d. An owner of residential property damaged as a result of “Superstorm Sandy” who is eligible for the receipt of funds through a recovery and rebuilding program and is the subject of a foreclosure proceeding as of the effective date of P.L. , c. (pending before the Legislature as this bill) shall , upon good cause shown, be awarded, by the court and upon application by the property owner, a stay in the foreclosure proceedings for 36 months from the date the court grants the application, or the first day of the third month next following the issuance of a certificate of occupancy for the residential property, whichever is sooner. An application to the court by a property owner under this section shall be made before the first day of the fifth month next following the effective date of P.L. , c. (pending before the Legislature as this bill).

e. The commissioner shall notify the owner of each residential property which has been determined to be eligible for the receipt of funds under a recovery and rebuilding program of the eligibility for a forbearance or stay of foreclosure proceedings prior to the first day of the second month next following enactment of P.L. , c. (pending before the Legislature as this bill).

f. The State shall reimburse a mortgagee up to 50 percent of 18-months worth of mortgage and interest payments on a residential property if that mortgagee is unable to recover at least that amount, through foreclosure and sale or by mortgage payments, after the end of the forbearance established pursuant to this section or a stay of proceedings granted pursuant to this section.

g. Any homeowner awarded a stay of foreclosure proceedings or forbearance under this section shall be responsible for the maintenance of the property during the stay or period of forbearance.

h. A stay of foreclosure proceedings or forbearance awarded under this section shall cease immediately if, after providing the homeowner an opportunity to be heard, a court determines that the subject residential property has been abandoned by the homeowner who was determined to be eligible for the receipt of funds through a recovery and rebuilding program.

i. Nothing in this section shall be construed as limiting the ability of a mortgagee and residential property owner to participate in a mediation sponsored by the Administrative Offices of the Court in accordance with the requirements of the mediation program. Nothing in this section shall be construed to impact property tax and insurance obligations of a property owner related to any real property in the State.

2. This act shall take effect immediately and shall expire on the first day of the 37th month next following enactment.

STATEMENT

This bill would delay the possible foreclosure of certain property that was damaged by “Superstorm Sandy.” Under the bill, a homeowner who is eligible for the receipt of funds through the Reconstruction Rehabilitation, Elevation, and Mitigation (RREM) program or the Low- to Moderate-Income (LMI) Homeowner's Rebuilding Program, as a victim of “Superstorm Sandy,” but who has not yet received those funds, would be eligible for a stay of foreclosure proceedings, or a forbearance period, during which time mortgage and interest payments would be deferred. With respect to “Superstorm Sandy” victim homeowners who are not in foreclosure, the substitute authorizes the homeowner to apply to the Commissioner of Community Affairs for a certificate of eligibility for mortgage forbearance. During the forbearance period, a homeowner would not have to make mortgage payments. The term of the mortgage shall automatically extend, under the same terms, for the number of months the mortgage is in forbearance. This forbearance would be in place for a period of 36 months from the issuance of the certification of eligibility for the forbearance by the commissioner, or no more than 60 days after a certificate of occupancy is issued for the property, whichever is sooner.

Under the bill, a “Superstorm Sandy” victim homeowner who is currently in foreclosure litigation and eligible to receive RREM or LMI funds could apply to the court for a stay of proceedings. The stay would be in place for 36 months, or 60 days after the issuance of a certificate of occupancy for the property damaged by the storm, whichever is sooner.