Assemblywoman BONNIE WATSON COLEMAN
District 15 (Mercer)
Assemblywoman MILA M. JASEY
District 27 (Essex)
Assemblywoman ELEASE EVANS
District 35 (Bergen and Passaic)
“New Jersey Foreclosure Fairness Act”; imposes additional foreclosure notice requirements; amends “Mortgage Stabilization and Relief Act.”
CURRENT VERSION OF TEXT
An Act concerning foreclosure on residential properties, supplementing and amending various sections of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section ) This act shall be known and may be cited as the “New Jersey Foreclosure Fairness Act.”
2. (New section) a. A person who takes title, as a result of a sheriff’s sale or deed in lieu of foreclosure, to a residential property containing one or more dwelling units occupied by residential tenants, shall provide notice, no later than five business days after the sale, via certified and regular mail, to the tenants in substantially the following form:
NOTICE TO TENANTS
THE FORMER OWNER OF . . . . . . . . . . . . (insert property address) HAS LOST THE PROPERTY AS A RESULT OF A FORECLOSURE. IF YOU ARE A TENANT AT . . . . . . . . . (insert property address) YOU HAVE THE RIGHT TO REMAIN IN YOUR HOUSE OR APARTMENT. THE NEW OWNER CANNOT FORCE YOU TO MOVE OUT BECAUSE OF THE FORECLOSURE.
YOU ARE PROTECTED BY NEW JERSEY'S ANTI-EVICTION ACT, N.J.S.A. 2A:18-61.1 ET SEQ. THE NEW OWNER CANNOT EVICT YOU WITHOUT "GOOD CAUSE," AS DETERMINED BY A COURT. THIS MEANS THAT ONLY A SHERIFF’S OFFICER WITH A COURT ORDER MAY REMOVE YOU FROM THE PREMISES, AND ONLY AFTER YOU HAVE BEEN GIVEN THE OPPORTUNITY TO DEFEND YOURSELF AGAINST EVICTION IN COURT. EXAMPLES OF "GOOD CAUSE" ARE FAILURE TO PAY RENT, WILLFULLY DAMAGING THE PREMISES, OR PERSONAL OCCUPANCY BY THE NEW OWNER OF THE HOUSE OR APARTMENT THAT YOU NOW LIVE IN.
IT IS ILLEGAL FOR THE NEW OWNER TO TRY TO FORCE YOU TO LEAVE YOUR HOME IN ANY OTHER MANNER, INCLUDING SHUTTING OFF UTILITIES OR FAILING TO MAINTAIN THE PREMISES. IF THE NEW OWNER PRESSURES YOU TO LEAVE, CONSULT WITH AN ATTORNEY OR FILE A COMPLAINT WITH YOUR LOCAL PROSECUTOR.
b. The notice required pursuant to subsection a. of this section shall be printed in no less than 16 point bold point type on heavy stock, at least eight and one-half inches by 11 inches in size, and shall contain contact information, including the name, mailing address, e-mail address, and telephone number of the new owner or a person authorized to act on behalf of the new owner.
c. The new owner shall make a diligent effort to obtain the names and addresses of all tenants occupying the property for which a notice is required pursuant to subsection a. of this section. The new owner shall post the notice, required pursuant to subsection a. of this section, prominently on the front door of each tenant’s unit.
d. Any person taking title to the residential property as a result of a sheriff’s sale or deed in lieu of foreclosure shall include a copy of the notice as set forth in subsection a. of this section in any written communication to a tenant for the purposes of inducing a tenant to vacate the property.
e. Service on any tenant of a summons and complaint in an action to foreclose on any residential property by any person, or any written communication by any person to a tenant in a residential property that. seeks to induce the tenant to vacate the property prior to the transfer of the property through sheriff’s sale or a deed in lieu of foreclosure, shall include a copy of the notice set forth in subsection a. of this section, except that the first sentence shall read:
A FORECLOSURE ACTION HAS BEEN INITIATED ON . . . . . . (insert address of property) AND THE OWNERSHIP OF THE PROPERTY MAY CHANGE AS A RESULT.
f. Any person, their agent, or employee, who violates the provisions of this section shall be subject to the civil remedies provided for in subsection a. of P.L.1975, c.311 (C.2A:18-61.6).
3. (New section) a. No person, their agent or employee, who has filed a complaint in an action to foreclose on a residential property, or who takes title to any residential property as a result of a sheriff’s sale or other transaction following the filing of a complaint in an action to foreclose a mortgage on the property shall make any communication to induce the tenant to vacate the property except through a bona fide monetary offer, which shall be made in accordance with the provisions of subsections d. and e. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. No person, their agent or employee, who has filed a complaint in an action to foreclose shall take any action placing pressure on a tenant to accept any offer to vacate the property, including, but not limited to:
(1) Mischaracterizing or misrepresenting the rights of the tenant under the Anti-Eviction Act, P.L.1974, c.49 (C.2A:18-61.1 et seq.), or any other State law or municipal ordinance;
(2) Stating the actions the owner may take against the tenant or implying the tenant is obligated to accept an offer or implying consequences against the tenant for failing to accept an offer;
(3) Any form of tenant harassment, including, but not limited to discontinuance of electricity, heat, or other utilities, failure to maintain the common areas or facilities of the property, or failure to make repairs in a timely and workmanlike fashion;
(4) Any rent increase in violation of a municipal rent control or rent leveling ordinance, or in the event the property is not subject to rent control, any rent increase in excess of the average of the previous two years’ rent increases; provided, however, that the increase is imposed no later than one year after the date the new owner took title to the property.
c. Any person, their agent or employee, who violates the provisions of this section shall be subject to the civil remedies provided for in subsection a. of P.L.1975, c.311 (C.2A:18-61.6).
4. Section 15 of P.L.2008, c.127 (C.46:10B-49) is amended to read as follows:
15. a. A creditor that institutes a mortgage foreclosure action in the Superior Court of New Jersey shall report to the Department of Banking and Insurance, on a quarterly basis and on a form promulgated by the department, information about the number of mortgage foreclosure actions filed by the creditor in the State.
b. The Department of Banking and Insurance shall produce a report, on a quarterly basis; detailing information about mortgage foreclosures filed by creditors in each [county] municipality of the State, and shall make the report available to the public on its website. The report shall describe the type of mortgage being foreclosed on based on the following categories:
(1) prime rate mortgages foreclosed upon;
(2) subprime rate mortgages foreclosed upon;
(3) fixed rate mortgages foreclosed upon;
(4) adjustable rate mortgages foreclosed upon;
(5) nonconforming mortgages, as defined by Fannie Mae, Freddie Mac, or their successors;
(6) mortgages insured by the Federal Housing Administration foreclosed upon;
(7) mortgages insured by the Veteran's Administration foreclosed upon; and
(8) any other category of classification the department deems appropriate to effectuate the purpose of this section.
c. The Department of Banking and Insurance, pursuant to the "Administrative Procedure Act," P.L.1986, c.410 (C.52:14B-1 et seq.) shall adopt regulations necessary to effectuate the purpose of this section.
(cf: P.L.2008, c.127, s.15)
5. Section 16 of P.L.2008, c.127 (C.46:10B-50) is amended to read as follows:
16. a. (1) A creditor that files, pursuant to the "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et al.), a complaint of foreclosure on a high risk mortgage loan, shall grant the borrower a six-month period of forbearance, upon request of the borrower, to pursue a loan workout, loan modification, refinancing, or other alternative through mediation sponsored by the Administrative Office of the Courts. During the six-month forbearance period, the interest rate on the [covered] mortgage loan shall not increase and the creditor shall take no further action to pursue foreclosure of the property. Nothing in this subsection shall constitute a limitation on the ability of the creditor and borrower to participate in mediation sponsored by the Administrative Office of the Courts or enter into an agreement as a result of that mediation pursuant to subsection b. of this section.
As used in this section:
"Forbearance" means a period of six months during which the judicial foreclosure proceedings filed by the creditor against the borrower are suspended[; however the borrower is obligated to continue making monthly mortgage payments].
"High Risk Mortgage" means the first mortgage loan that has one or more of the following characteristics:
is an interest only mortgage with a future interest reset rate;
has a reset mortgage interest rate that increases the interest rate;
contains a payment option plan or a "pick a payment" plan;
contains a negative amortization schedule;
is a subprime mortgage, which means a consumer credit transaction, secured by the consumer’s principal dwelling, with an annual percentage rate that exceeds the average prime offer rate for a comparable transaction, as of the date the interest rate is set, by 1.5 or more percentage points for loans secured by a first lien on a dwelling, or by 3.5 or more percentage points for loans secured by a subordinate lien on a dwelling;
contains an enforceable prepayment penalty; or
is a high cost home loan as defined in section 3 of the "New Jersey Home Ownership Security Act of 2002," P.L.2003, c.64 (C.46:10B-24).
(2) Upon serving the summons and complaint in a foreclosure action, the creditor shall notify the borrower of the borrower’s right to forbearance as provided for in this section, and, upon receipt of written request by the borrower, within 30 days of the receipt of the summons and complaint, the creditor shall grant the borrower a period of forbearance, beginning on the date the creditor receives the borrower’s request.
(3) The notice of the borrower’s right to forbearance shall include the following information:
(a) whether the loan being foreclosed upon is eligible to receive forbearance;
(b) that the borrower has the right to request the period of forbearance in writing no later than 30 days after receipt of the summons and complaint;
(c) the full address and other contact information to which the request for forbearance may be sent.
(4) Upon receipt of a request for forbearance, the creditor shall advise the court to place a six-month stay on the foreclosure action.
b. Upon filing of a complaint for foreclosure, and the beginning of the six-month forbearance period, the borrower and creditor shall participate in mediation sponsored by the Administrative Office of the Courts; provided, however, that the inability of the borrower to participate in mediation as a result of circumstances beyond the borrower’s control shall not affect the borrower’s continued eligibility for forbearance.
c. If the borrower ceases to occupy the property at any time subsequent to the period of forbearance under this section, the creditor may notify the court, and upon notification the period of forbearance shall be deemed to have ended.
d. The provisions of this section shall expire two years following the effective date of [P.L.2008, c.127] P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.2008, c.127, s.16)
6. Section 17 of P.L.2008, c.127 (C.46:10B-51) is amended to read as follows:
17. a. (1) A creditor serving a [notice of intention to foreclose] summons and complaint in an action to foreclose on a mortgage on residential property in this State shall [serve] notify the [public officer] municipal clerk of the municipality in which the property is located[, or, if the municipality has not designated a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), the municipal clerk with a copy of the notice at the same time it is served on the owner of the] that a foreclosure complaint has been filed against the subject property. The notice may be effectuated via electronic communication. If the municipality has appointed a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), the municipal clerk shall forward a copy of the notice to the public officer.
(2) In the event that the property being foreclosed is an affordable unit pursuant to the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.), then the creditor shall identify that the property is subject to the "Fair Housing Act." This notice requirement may be effectuated via electronic communication to the municipality at the time the complaint for foreclosure is filed. The copy served on the public officer or municipal clerk shall include the full name and contact information of an individual located within the State who is authorized to accept service on behalf of the creditor.
(3) Within 30 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), any creditor that has initiated a foreclosure proceeding on any residential property which is pending in Superior Court shall provide to the municipal clerk of the municipality in which the property is located, a listing of all residential properties in the municipality for which the creditor has foreclosure actions pending by street address and lot and block number.
b. If the owner of a residential property vacates any property on which a foreclosure proceeding has been initiated or if a residential property becomes vacant at any point subsequent to the creditor's filing the notice of intention to foreclose, but prior to vesting of title in the creditor or any other third party, and the property is found to be a nuisance or in violation of any applicable State or local code, the local public officer or municipal clerk shall notify the creditor, which shall have the responsibility to abate the nuisance or correct the violation in the same manner and to the same extent as the title owner of the property, to such standard or specification as may be required by the public officer or municipal clerk.
c. If the municipality expends public funds in order to abate a nuisance or correct a violation on a residential property in situations in which the creditor was given notice pursuant to the provisions of subsection b. of this section but failed to abate the nuisance or correct the violation as directed, the public officer or municipal clerk shall have the same recourse against the creditor as it would have against the title owner of the property, including but not limited to the recourse provided under section 23 of P.L.2003, c.210 (C.55:19-100).
(cf: P.L.2008, c.127, s.17)
7. This act shall take effect immediately.
This bill imposes additional requirements on lenders seeking to foreclose on a residential mortgage property and take title to the property. The bill requires persons taking title to a property through sheriff’s sale or deed in lieu of foreclosure to send notice to any tenants at the property that ownership has changed and that the tenants are not required to vacate the premises unless the new owner files an eviction complaint in Superior Court and obtains a court order requiring the tenant to move. A new owner who does not provide the notice to the residential tenant is liable to the tenant in a civil action for triple damages plus attorney’s fees and costs.
The new owner must include the notice in any communication with the tenant which seeks to induce the tenants to vacate the property. The new owner of the property must make a diligent effort to obtain the names and addresses of all tenants occupying the property. If enacted, this legislation would prohibit the new owner from harassing a tenant or mischaracterizing the right of the tenant to remain in the property under any federal, State, or local law.
The bill amends the “Mortgage Stabilization and Relief Act,” P.L.2008, c.127, to require a lender that files a foreclosure complaint to provide to the municipal clerk of the municipality where the property is located a list detailing the location of all property the creditor is foreclosing on within the municipality and the status of each action. Current law requires the Department of Banking and Insurance to provide detailed information on residential foreclosures, arranged by county. The bill requires that this information be arranged by municipality and include the disposition of all foreclosure actions initiated by the creditor within the municipality. Information sent to the municipal clerk by the creditor may be provided by way of electronic communication.
The bill permits a borrower whose property is subject to a foreclosure complaint to request, in writing, a period of forbearance, within 30 days of being served with the foreclosure complaint. The forbearance period shall last six months, during which time no action shall be taken by the lender to foreclose on the property. The lender must provide the borrower with information about the forbearance period, including the address to which any request for forbearance may be sent. The bill states that failure of the borrower to participate in court sponsored mediation, due to circumstances beyond the borrower’s control, will not inhibit the borrower’s continued eligibility for forbearance. The bill extends the term for which a period of forbearance is offered from January 9, 2011 to two years following the effective date of the bill.
The bill further amends the Mortgage Stabilization and Relief Act to require that a creditor serving a complaint for foreclosure on a property that is an affordable housing unit pursuant to the Fair Housing Act notify the municipality, via electronic communication, that the property is an designated as affordable housing.