The NJ Senate recently passed a bill that sets out to provide funds for New Jersey residents facing foreclosure. The law, S3244, would create the NJ Housing and Mortgage Finance Agency (HMFA). This agency would be able to purchase properties facing foreclosure proceedings to give homeowners the time and resources needed to maintain ownership of their homes. The agency would also work to help residents obtain a more affordable mortgage. Because New Jersey has long been known as the state with the highest number of foreclosures, and now also ranks fourth in the nation for delinquent mortgages , this is welcome relief for struggling NJ homeowners.
This legislation is due in part to a projected rise in foreclosure filings some experts are predicting after the current eviction moratorium expires. The HMFA program would be funded through the Foreclosure Intervention Fund. Through this funding, the HMFA would be able to purchase loans on properties at risk of foreclosure and give homeowners the chance to refinance their mortgages. The S3244 bill would also allow the HMFA to provide grants to non-profit housing organizations to carry out similar duties.
Keep in mind there is plenty you can do before you are at risk of foreclosure. Besides the current mortgage deferral programs (which can allow you to defer mortgage payments for up to a year), you can speak to your lender about loan modification, refinancing, or a revised repayment plan. Working with your lender and informing them up front that you foresee issues is often the best way to avoid losing your home.
A word of caution for struggling homeowners: as more legitimate programs form to offer foreclosure protection, there is also the possibility of a rise in foreclosure relief SCAMS. Scammers specifically target those experiencing difficulty making their regular mortgage payments.
Avoid contact with any company or organization that:
- Asks for a fee BEFORE providing services: Self-titled foreclosure "rescue" companies will ask you to pay high fees for their services only to stop returning your calls once they receive the money.
- Says they can force your lender to cancel or modify a loan: These companies will claim to be able to find mistakes in your loan documents that will allow you to cancel or renegotiate terms with your lender. Canceling your loan will not prevent you from losing your house. Lenders are also not required to modify the payment terms of your loan because of mistakes in loan documents.
- Tells you to stop communicating with your mortgage company: Never let a company convince you to stop sending payments to your mortgage company or cease communication with them entirely. Often, your best chance at saving your home is to work with your lender.
- Offers a 100% guarantee: Any company that guarantees they can save your home is likely a scam.
If you are in forbearance on your mortgage right now and wondering what will come next, you don't have to figure it out alone. When you're feeling overwhelmed and don't know what to do next, our knowledgeable real estate law team can help you determine your best options. If your goal is to avoid foreclosure and keep your home, we will work with your lender and/or the courts to help make that happen.