ASSEMBLY, No. 4307

STATE OF NEW JERSEY

212th LEGISLATURE

 

INTRODUCED MAY 21, 2007

 


 

Sponsored by:

Assemblyman WILFREDO CARABALLO

District 29 (Essex and Union)

Assemblyman NEIL M. COHEN

District 20 (Union)

 

 

 

 

SYNOPSIS

     Authorizes and requires HMFA to offer refinance loan program for borrowers of high-cost home loans.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning the refinancing of certain residential mortgages      and supplementing P.L.1983, c.530 (C.55:14K-1 et seq.).

 

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

 

     1.    Notwithstanding any provision of law, rule or regulation to the contrary, within 90 days of the effective date of this act the New Jersey Housing and Mortgage Finance Agency shall develop a program to offer low and moderate income borrowers whose residential mortgage loans meet the criteria set forth for “high-cost home loans,” as defined in section 3 of the "New Jersey Home Ownership Security Act of 2002,” P.L.2004, c.64 (C.46:10B-24), the opportunity to refinance those high-cost home loans as lower interest fixed-rate loans.  The agency may borrow money or secure credit and issue negotiable bonds and secure the payment thereof in an amount not to exceed $500,000,000 to be placed in a dedicated fund and used exclusively for the purpose of making loans to refinance high-cost home loans.  The agency may establish a priority system for the making of loans pursuant to this section utilizing factors such as income, need, ratio of income to mortgage payments, and likelihood of pending foreclosure, and also may establish different maximum income levels for eligibility in the program for residents of different counties.  Loans awarded pursuant to this section shall be fixed-rate loans and shall be awarded for a maximum term of 40 years.

 

     2.    This act shall take effect immediately.

 

 

STATEMENT

 

     This bill would authorize and require the New Jersey Housing and Mortgage Finance Agency to develop a program to offer low and moderate income borrowers whose residential mortgage loans meet the criteria set forth for “high-cost home loans” the opportunity to refinance those high-cost home loans as lower interest fixed-rate loans.  The bill would authorize the agency to borrow money or secure credit and issue negotiable bonds and secure the payment thereof in an amount not to exceed $500,000,000 to be placed in a dedicated fund and used exclusively for the purpose of making loans to refinance high-cost home loans.  The bill would allow the agency to establish a priority system for the making of loans pursuant to this section utilizing factors such as income, need, ratio of income to mortgage payments, and likelihood of pending foreclosure, and also to establish different maximum income levels for eligibility in the program for residents of different counties.  Loans awarded pursuant to this section shall be fixed-rate loans and shall be awarded for a maximum term of 40 years.

     Generally, this new program will serve existing homeowners whose mortgages were obtained in the subprime lending market because they could not qualify for conventional mortgages.  Borrowers in the subprime market are typically charged higher interest rates and fees because their credit history problems, high debt relative to their income, or unstable employment history indicate to lenders that they are higher risks.  The State is witnessing a dramatic increase in the number of mortgage foreclosures on subprime loans, particularly in the urban areas of the State.  The dream of homeownership has collided with rising interest rates, declining home values and the collapse of subprime mortgages as an investment vehicle.  Without this re-financing assistance, the combination of these forces will drive these working families from their homes.  By allowing borrowers to refinance these onerous loans with more traditional fixed-rate mortgages, this bill will allow these families to stay in their homes and permit them a better chance to continue as productive contributing members of their communities.