A1456

An Act concerning mortgage assistance for benefit of certain low- and moderate-income homeowners, supplementing chapter 14K of Title 55, and making an appropriation.

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

1. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):

"Agency" means the New Jersey Housing and Mortgage Finance Agency, established pursuant to section 4 of P.L.1983, c.530 (C.55:14K-4).

"Deep subsidy" means mortgage assistance necessary to completely cover all mortgage payments in arrears, including fees and other penalties for delinquent mortgage payments, court costs, attorney’s fees, all other related fees and expenses incurred as a result of the delinquency, and six months in advance monthly mortgage payments.

"Executive director" means the Executive Director of the New Jersey Housing and Mortgage Finance Agency.

"Imminent risk of homelessness" means the risk of missing one or more monthly mortgage payments after a qualifying economic hardship that causes a 50 percent or greater reduction in the gross household income.

"Low-income homeowner" means a homeowner with a gross household income equal to 50 percent or less of the median gross household income for households of the same size within the housing region in which the housing is located.

"Moderate-income homeowner" means a homeowner with a gross household income equal to more than 50 percent but less than 80 percent of the median gross household income for households of the same size within the housing region in which the housing is located.

"Moderate subsidy" means mortgage assistance necessary to completely cover all mortgage payments in arrears, including fees and other penalties for delinquent mortgage payments, court costs, attorney’s fees, all other related fees and expenses incurred as a result of the delinquency, and two months in advance monthly mortgage payments.

"Mortgage assistance program" means the zero-interest, forgivable mortgage assistance program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Principal residence" means a homestead that is actually and continually occupied as the permanent residence of a household, as distinguished from a vacation home, real property owned and rented or offered for rent by the household, or other secondary real property holdings.

"Qualifying economic hardship" means:

(1) the involuntary termination of employment or loss of a primary or secondary source of income;

(2) the death of a family member;

(3) a divorce or separation;

(4) an illness, incapacity, disability, or economic event that causes a substantial reduction in household income; or

(5) any other economic hardship that the agency determines to be necessary to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Shallow subsidy" means mortgage assistance necessary to completely cover two months in advance monthly mortgage payments.

"Single-family housing" means a one- to four-family residence, a condominium unit, a cooperative unit, a combination of a manufactured housing and lot, or a manufactured housing lot.

"Single subsidy" means mortgage assistance necessary to completely cover one month in advance monthly mortgage payments.

2. a. There is established in the New Jersey Housing and Mortgage Finance Agency a mortgage assistance program, which shall provide zero-interest, forgivable mortgage loan awards in the form of deep, moderate, shallow, or single subsidies to provide mortgage assistance for low- or moderate-income homeowners who are in imminent risk of homelessness, have experienced a qualifying economic hardship, have failed to make one or more monthly payments on their mortgage, or are at risk of failing to make one or more monthly payments on their mortgage.

(2) The mortgage assistance program shall provide:

(a) deep subsidies for low- or moderate-income homeowners who are in imminent risk of homelessness and have failed to make three or more monthly mortgage payments;

(b) moderate subsidies for low- or moderate-income homeowners who have experienced a qualifying economic hardship and are delinquent on any mortgage payments;

(d) single subsides for low- or moderate-income homeowners who are at risk of missing a mortgage payment or have experienced a qualifying economic hardship.

b. (1) A recipient homeowner shall commit to use the home as the recipient’s principal residence for three years following the use of a subsidy pursuant to this section. The agency shall forgive the loan payment, provided that the three-year commitment is satisfied and the low- or moderate-income homeowner meets the other requirements established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).

(2) Each low- or moderate-income homeowner who receives mortgage assistance through the mortgage assistance program shall, prior to the issuance of a loan award, complete a homeowner counseling course, as directed by the agency pursuant to subsection c. of this section. The homeowner counseling course may include, but not be limited to, coursework concerning:

(a) the maintenance of housing costs, including methods for budgeting mortgage payments, utility charges, property taxes, and any other applicable housing cost; and

(b) the basics of home finance, property taxes, home warranties, and home inspection.

c. The executive director shall develop program guidelines to effectuate, administer, and accomplish the purposes of the mortgage assistance program. The guidelines shall, at a minimum, set forth the requirements for application submissions, the criteria for application selections, the eligible uses of mortgage assistance, eligibility as a low- or moderate-income homeowner, and the curriculum and provision of the homeowner counseling course.

d. (1) Except as provided pursuant to paragraph (2) of this subsection, a mortgage assistance loan shall be recoverable as a lien on the real property that the loan is used to provide mortgage assistance concerning, plus interest, reasonable attorney’s fees, and court costs, and shall have the priority over all other liens on the real property.

(2) A mortgage assistance loan shall be recoverable as a lien pursuant to paragraph (1) of this subsection if:

(a) The mortgage assistance is not used for the eligible uses specified by the executive director pursuant to subsection c. of this section;

(b) the loan recipient is found to have provided false information on their application, or failed to be sufficiently forthcoming in the information required for eligibility, receipt of the loan, or in communicating how the assistance was utilized; or

(3) The mortgage assistance shall not be recoverable if failure to reside in the home as the recipient homeowner’s principal residence for three years following the use of the subsidy is due to:

(a) circumstances beyond the homeowner’s control; or

(b) the death or incapacity of the homeowner.

e. The annual appropriations acts following State fiscal year 2026 shall appropriate not less than $200,000,000 from the General Fund to the agency, during each State fiscal year in which the mortgage assistance program remains in operation, to effectuate the purposes of the mortgage assistance program, and defray the costs associated with administering the mortgage assistance program, except that the agency shall retain not more than one percent of the annual appropriation for administrative costs. Of the total amount of mortgage assistance funding awarded each State fiscal year through the mortgage assistance program, no less than 25 percent shall be awarded to low-income homeowners, and no less than 25 percent shall be awarded to low- or moderate-income homeowners who are in imminent risk of homelessness, unless the agency determines that 25 percent of the mortgage assistance funding cannot be awarded to low-income homeowners, or that 25 percent of the funding cannot be awarded to low- or moderate-income homeowners who are in imminent risk of homelessness, because too few qualifying homeowners have applied for the relevant category of mortgage assistance under the program, in which case, the balance of remaining funding, subject to the relevant limitation, shall be awarded to homeowners who otherwise qualify for assistance under the program.

f. No later than the 365th day next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and at least once every year thereafter, the agency shall prepare and submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. The report shall analyze the efficacy of the mortgage assistance program. The report shall: provide an overview of the total amount of deep and shallow subsidies provided by the agency, with information by census tract on the race, ethnicity, and income of the recipients of mortgage assistance; and contain any other information determined by the agency to be relevant to the costs and benefits of the mortgage assistance program.

3. The Executive Director of the New Jersey Housing and Mortgage Finance Agency shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. There is appropriated to the New Jersey Housing and Mortgage Finance Agency from the General Fund, a sum of $200,000,000 to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

5. This act shall take effect on the first day of the third month next following enactment, except the executive director shall take anticipatory action necessary to effectuate the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

STATEMENT

This bill establishes a mortgage assistance program in the New Jersey Housing and Mortgage Finance Agency (agency) to provide mortgage assistance for low- or moderate-income homeowners who are in imminent risk of homelessness, as defined in the bill; have experienced a qualifying economic hardship; have failed to make one or more monthly payments on their mortgage; or are at risk of failing to make one or more monthly payments on their mortgage.

Specifically, the mortgage assistance program is to provide to low- or moderate-income homeowners a zero-interest, forgivable loan award in the form of deep, moderate, shallow, or single subsidies to be used for mortgage assistance for the homeowner’s principal residence. The bill defines the term "qualifying economic hardship" to mean:

§ the involuntary termination of employment or loss of a primary or secondary source of income;

§ the death of a family member;

§ a divorce or separation;

§ an illness, incapacity, disability, or economic event that causes a substantial reduction in household income; or

§ any other economic hardship that the agency determines to be necessary to effectuate the purposes of the bill.

The bill also defines a "single subsidy" as mortgage assistance necessary to completely cover one month in advance monthly mortgage payments; a "shallow subsidy" as mortgage assistance necessary to completely cover two months in advance monthly mortgage payments; a "moderate subsidy" as mortgage assistance necessary to completely cover all mortgage payments in arrears, including fees and other penalties for delinquent mortgage payments, court costs, attorney’s fees, all other related fees and expenses incurred as a result of the delinquency, and two months in advance monthly mortgage payments; and a "deep subsidy" as mortgage assistance necessary to completely cover all mortgage payments in arrears, including fees and other penalties for delinquent mortgage payments, court costs, attorney’s fees, all other related fees and expenses incurred as a result of the delinquency, and six months in advance monthly mortgage payments.

The bill requires the recipient to reside in the home for which the mortgage assistance was provided for a period of three years subsequent to the use of the subsidy payment, and participate in a homeowner counseling course, as described in the bill, prior to the receipt of assistance. The mortgage assistance loan is to be recoverable as a lien if certain criteria are not satisfied, except as provided in the bill.

The bill specifies that annual appropriations acts following the State fiscal year of the bill’s enactment are to appropriate not less than $200 million from the General Fund to the agency, during each State fiscal year in which the mortgage assistance program remains in operation, to effectuate the purposes of the bill, and defray the costs associated with administering the mortgage assistance program. The bill permits the agency to retain for administrative costs one percent of the annual appropriation.

The bill requires that 25 percent of funding awarded through the mortgage assistance program is to be awarded to low-income homeowners, and no less than 25 percent is be awarded to low- or moderate-income homeowners who are in imminent risk of homelessness. If the agency determines that the funding cannot be awarded, because too few qualifying homeowners have applied for the relevant aid category, the bill authorizes the agency to award more of the funding to otherwise qualifying homeowners.

The bill requires the agency to report on the impact of the mortgage assistance program every year, and appropriates to the agency, $200 million from the General Fund to effectuate the provisions of the bill.

The bill would take effect on the first day of the third month next following the date of enactment, except that the Executive Director of the agency would be required to take anticipatory action necessary to effectuate the provisions of the bill.