SENATE, No. 567

STATE OF NEW JERSEY

214th LEGISLATURE

 

PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION

 


 

Sponsored by:

Senator  SANDRA B. CUNNINGHAM

District 31 (Hudson)

Senator  BRIAN P. STACK

District 33 (Hudson)

 

 

 

 

SYNOPSIS

     Redirects appropriations in "Mortgage Stabilization and Relief Act" (2009) to provide more effective foreclosure relief to homeowners.

 

CURRENT VERSION OF TEXT

     Introduced Pending Technical Review by Legislative Counsel

  


An Act concerning neighborhood stabilization and amending and supplementing P.L.2008, c.127.

 

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

 

     1.    Section 3 of P.L.2008, c.127 (C.55:14K-84) is amended to read as follows:

     3.    Sections 3 through 7 of P.L.2008, c.127 (C.55:14K-84 et seq.) and sections 4 and 5 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill) shall be known and may be referred to as the "Mortgage and Neighborhood Stabilization Financing Assistance Program."

(cf: P.L.2008, c.127, s.3)

 

     2.    Section 4 of P.L.2008, c.127 (C.55:14K-85) is amended to read as follows:

     4.    As used in sections 4 through 7 of P.L.2008, c.127 (C.55:14K-84 et seq.) and sections 4 and 5 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill):

     "Affordable mortgage payment" means a monthly mortgage payment that does not exceed the greater of either 33% or the applicable percentage required by governmental or private first mortgage loan insurance, of the household's monthly average annual gross income, towards the payment of principal, interest, taxes, and insurance (PITI) which is determined using traditional underwriting standards.

     "Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to P.L.1983, c.530 (C.55:14K-1 et seq.).

     “Community Development Financial Institution” means any entity designated by the United States Department of the Treasury as a Community Development Financial Institution pursuant to 12 CFR 1805.

     "Covered Mortgage" means a first mortgage loan that is in imminent danger of foreclosure.

     “Eligible property” means any residential property that is vacant, is or has been the subject of mortgage or tax foreclosure proceedings, and is located in an area that has been impacted by foreclosures which is the subject of a program of neighborhood stabilization.

     "Homeowner" means the individual who holds legal title to a residential real property that is the individual's principal dwelling and is in imminent danger of foreclosure.

     "Lender" means any lawfully constituted mortgage lender, mortgage investor or mortgage loan servicer that owns and is willing to refinance or is authorized to negotiate the terms of the homeowner's mortgage.

     "Maximum income limit" means a household income that does not exceed 120% of the area median income, as defined for New Jersey in guidelines published annually by the United States Department of Housing and Urban Development, or that does not exceed the New Jersey Housing and Mortgage Finance Agency's Mortgage Revenue Bond Program income limits, whichever is greater.

     "Mortgage lender loan" means a loan provided by a lender that is secured by a lien holding second priority and equal to one-half of the difference between the new first mortgage loan and the current appraised value of the property.

     "Mortgage Stabilization Program" or "program" means a financing program established pursuant to section 5 of P.L.2008, c.127 (C.55:14K-86).

     "Mortgage stabilization program loan" means the loan provided to the homeowner by the agency pursuant to section 5 of P.L.2008, c.127 (C.55:14K-86).

     “Program of neighborhood stabilization” means a concerted program to stabilize a neighborhood which has been impacted negatively by foreclosures or by vacant property, including, but not limited to, any program being carried out with federal funds provided by the United States Department of Housing and Urban Development or that is the subject of a comprehensive neighborhood stabilization plan.

     "Property" means an owner-occupied primary residence, (1) that is either a single-family one-unit house; an attached, semi-detached, or detached house; a condominium unit; or an owner-occupied two- or three-unit house, and (2) that is the principal dwelling of a homeowner who has resided in the property for at least one year prior to applying for assistance.

     “Qualified entity” means a non-profit or public entity whose purposes include the acquisition and rehabilitation of residential property and which has demonstrated experience in carrying out such activities in the State of New Jersey.

(cf: P.L.2008, c.127, s.4)

 

     3.    Section 5 of P.L.2008, c.127 (C.55:14K-86) is amended to read as follows:

     5.    There is established in the New Jersey Housing and Mortgage Finance Agency a Mortgage and Neighborhood Stabilization Financing Assistance Program and Mortgage and Neighborhood Stabilization Financing Assistance Program Fund for the purpose of assisting homeowners and lenders willing to refinance covered mortgages in order to ensure that the homeowner has an affordable mortgage payment and assisting Community Development Financial Institutions to finance the acquisition and rehabilitation of eligible properties[The program shall meet the following requirements:]

     a.     [Program assistance shall not be made available unless a lender modifies or refinances the homeowner's mortgage loan so that the new first mortgage loan amount:

     (1)   results in an affordable mortgage payment; and

     (2)   results in a new first mortgage loan amount that is less than the appraised value of the property at the time of the modification or refinancing.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     b.    [The program shall provide:

     (1)   a mortgage stabilization program loan that is a non-amortizing (no monthly payment) second mortgage loan equal to one-half of the difference between the new first mortgage loan amount and the appraised value of the subject property.  The available funds for such loan shall not exceed $25,000 per loan, and the proceeds of the loan shall be provided to the covered mortgage lender; and

     (2)   a mortgage lender loan.

Loans made pursuant to this subsection shall share a co-equal second mortgage position with each other.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     c.     [The mortgage stabilization program loan and the mortgage lender loan shall each have an interest rate and term identical to the interest rate and term of the new first mortgage loan.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     d.    [Mortgage stabilization program loans and mortgage lender loans may be prepaid at any time without penalty and shall be repaid on a proportional basis by the homeowner out of the net sale proceeds from the sale of the property.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     e.     [The homeowner shall not be permitted to take cash-out refinances, except for agency approved emergency repairs or unless the mortgage stabilization program loan and the mortgage lender loan are repaid in full.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     f.     [In order to be eligible to participate in the program, the homeowner must not exceed the maximum income limits as defined in section 4 of P.L.2008, c.127 (C.55:14K-85).]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     g.     [The homeowner may not hold any interest in other residential real property at the time the application to participate in the program is made.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     h.     [If a homeowner has an existing subordinate mortgage loan held by one or more entities, the holder of the subordinate lien must agree to take subordinated mortgage position behind the mortgage stabilization program loan and the mortgage lender loan.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     i.      [If the property is subject to an existing subordinate mortgage the mortgage stabilization program loan may, at the discretion of the agency, be used to satisfy that mortgage, or the mortgage lender loan may, at the discretion of the mortgage lender, be used to satisfy an existing subordinate mortgage, or both.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     j.     [Homeowners must participate in budget counseling sessions approved by the agency in order to be eligible for the program.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     k.    [Repayments of mortgage stabilization program loans shall be deposited into the Mortgage Stabilization Program Fund.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     l.      [Benefits directly or indirectly received by a homeowner under the Mortgage Stabilization Program shall not be treated as income in determining eligibility requirements for other State programs and payments and benefits directly or indirectly received by a homeowner who is a taxpayer shall not be treated as income for New Jersey gross income tax purposes pursuant to section 2 of P.L.1988, c.29 (C.54A:6-22).]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

(cf: P.L.2008, c.127, s.5)

 

     4.    (New section)  Mortgage stabilization loans made under this section shall meet the following requirements:

     a.     Program assistance shall not be made available unless a lender modifies or refinances the homeowner's mortgage loan so that the new first mortgage loan amount:

     (1)   results in an affordable mortgage payment; and

     (2)   results in a new first mortgage loan amount that is less than the appraised value of the property at the time of the modification or refinancing.

     b.    The program shall provide:

     (1)   a mortgage stabilization program loan that is a non-amortizing (no monthly payment) second mortgage loan equal to one-half of the difference between the new first mortgage loan amount and the appraised value of the subject property.  The available funds for such loan shall not exceed $25,000 per loan, and the proceeds of the loan shall be provided to the covered mortgage lender; and

     (2)   a mortgage lender loan.

Loans made pursuant to this subsection shall share a co-equal second mortgage position with each other.

     c.     The mortgage stabilization program loan and the mortgage lender loan shall each have an interest rate and term identical to the interest rate and term of the new first mortgage loan.

     d.    Mortgage stabilization program loans and mortgage lender loans may be prepaid at any time without penalty and shall be repaid on a proportional basis by the homeowner out of the net sale proceeds from the sale of the property.

     e.     The homeowner shall not be permitted to take cash-out refinances, except for agency approved emergency repairs or unless the mortgage stabilization program loan and the mortgage lender loan are repaid in full.

     f.     In order to be eligible to participate in the program, the homeowner must not exceed the maximum income limits as defined in section 4 of P.L.2008, c.127 (C.55:14K-85).

     g.     The homeowner may not hold any interest in other residential real property at the time the application to participate in the program is made.

     h.     If a homeowner has an existing subordinate mortgage loan held by one or more entities, the holder of the subordinate lien must agree to take subordinated mortgage position behind the mortgage stabilization program loan and the mortgage lender loan.

     i.      If the property is subject to an existing subordinate mortgage the mortgage stabilization program loan may, at the discretion of the agency, be used to satisfy that mortgage, or the mortgage lender loan may, at the discretion of the mortgage lender, be used to satisfy an existing subordinate mortgage, or both.

     j.     Homeowners must participate in budget counseling sessions approved by the agency in order to be eligible for the program.

     k.    Repayments of mortgage stabilization program loans shall be deposited into the Mortgage and Neighborhood Stabilization Financing Assistance Program Fund.

     l.      Benefits directly or indirectly received by a homeowner under the Mortgage and Neighborhood Stabilization Financing Assistance Program shall not be treated as income in determining eligibility requirements for other State programs and payments and benefits directly or indirectly received by a homeowner who is a taxpayer shall not be treated as income for New Jersey gross income tax purposes pursuant to section 2 of P.L.1988, c.29 (C.54A:6-22).

 

     5.    (New section)  The agency shall set aside all or part of the funds appropriated to the Mortgage and Neighborhood Stabilization Financing Assistance Program Fund to be used for the purpose of financing the acquisition and rehabilitation of eligible properties by qualified entities subject to the following requirements:

     a.     No less than $20 million of the funds appropriated to the Mortgage and Neighborhood Stabilization Financing Assistance Program Fund, or four-fifths of the remaining available balance, whichever is less, shall be used to provide loans or permanent loan capital to Community Development Financial Institutions for such purposes.

     b.    In order to be eligible to receive funds under this section, a Community Development Financial Institution must demonstrate that it is financially sound and that it has experience financing the acquisition and rehabilitation of housing in the State of New Jersey;

     c.     The agency, or any Community Development Financial Institution receiving funds under this section, shall use these funds to provide direct loans, establish lines of credit, or provide credit enhancements for loan pools or loans by third parties as may be appropriate to further the acquisition and rehabilitation of eligible properties by qualified entities.

     d.    The agency, or any Community Development Financial Institution receiving funds under this section, shall maximize the extent to which those funds will leverage private financing.

     e.     All loans made under this section shall be secured by a mortgage on the subject property.

     f.     Community Development Financial Institutions receiving funds under this section shall adopt written loan criteria for all loans made, which shall take into account the development capacity and financial soundness of the loan recipient, market conditions in the areas in which eligible properties are located, and the reuse potential of such properties.

     g.     Community Development Financial Institutions receiving funds under this section shall provide semi-annual reports to the agency on activities carried out with those funds.

 

     6.    Section 7 of P.L.2008, c.127 is amended to read as follows:

     7.    Notwithstanding the provisions of P.L.2008, c.22 (C.52:9H-2.1 et al.), there is appropriated from the Long Term Obligation and Capital Expenditure Fund the sum of $25,000,000 to the Mortgage and Neighborhood Stabilization Financing Assistance Program Fund for the purposes of the Mortgage and Neighborhood Stabilization Financing Assistance Program, of which five percent may be used for the purposes of administering the program.

     7.    Section 8 of P.L.2008, c.127 (C.55:14K-88) is amended to read as follows:

     8.    Sections 8 through 14 of P.L.2008, c.127 (C.55:14K-88 et seq.) and sections 10 and 12 of P.L.    , c.    (C.      _) (pending before the Legislature as this bill) shall be known and may be referred to as the "New Jersey Interim Financing and Housing Assistance and Recovery Program."

(cf: P.L.2008, c.127, s.8)

 

     8.    Section 9 of P.L.2008, c.127 (C.55:14K-89) is amended to read as follows:

     9.    As used in sections 9 through 14 of P.L.2008, c.127 (C.55:14K-89 et seq.) and sections 10 and 12 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill):

     "Affordable rent" means monthly rent or lease payments that do not exceed 33% of the household's monthly average gross income.

     "Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to P.L.1983, c.530 (C.55:14K-1 et seq.).

     "Commissioner" means the Commissioner of Community Affairs.

     “Community Development Financial Institution” means any entity designated by the United States Department of the Treasury as a Community Development Financial Institution pursuant to 12 CFR 1805.

     “Eligible household” means a household whose incomes does not exceed the maximum income limit as defined herein.

     “Eligible property” means any residential property that is vacant, is or has been the subject of mortgage or tax foreclosure proceedings, and is located in an area that has been impacted by foreclosures which is the subject of a program of neighborhood stabilization.

     "HARP property" means a one-, two- or three-family dwelling that is the primary residence of the household.

     "Homeowner" means the individual who holds legal title to a residential real property that is the individual's principal dwelling and is in imminent danger of foreclosure.

     "Household" means a homeowner and individuals who resided with the homeowner at the time the lease-purchase agreement was executed and continue to reside with the homeowner at the time the agreement of sale is executed.

     "HUD" means the United States Department of Housing and Urban Development.

     "HUD certified housing counseling agency" means a community-based non-profit organization, as demonstrated by section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. s.501(c)(3), which has been certified by the United States Department of Housing and Urban Development as experienced in housing counseling for at least one year prior to receiving certification.

     "Fund" means the Housing Assistance and Recovery Program Support Fund established by section 10 of P.L.2008, c.127 (C.55:14K-90).

     "Lease-purchase agreement" means a use and occupancy agreement approved by the agency whereby the sponsor acquires title to the homeowner's property and agrees to permit the former homeowner to use and occupy the property for a period not to exceed 36 months at an affordable rent.

     "Lender" means the owner of the homeowner's mortgage.

     "Maximum income limit" means a household income that does not exceed 120% of the area median income, as defined for New Jersey in guidelines published annually by the United States Department of Housing and Urban Development, or that does not exceed the New Jersey Housing and Mortgage Finance Agency's Mortgage Revenue Bond Program income limits, whichever is greater.

     "Program" means the "New Jersey Housing Assistance and Recovery Program."

     ["Property" means a one-, two- or three-family dwelling that is the primary residence of the household.]

     “Program of neighborhood stabilization” means a concerted program to stabilize a neighborhood which has been impacted negatively by foreclosures or by vacant property, including, but not limited to, any program being carried out with federal funds provided by the United States Department of Housing and Urban Development or that is the subject of a comprehensive neighborhood stabilization plan.

     “Qualified entity” means a non-profit or public entity whose purposes include the acquisition and rehabilitation of residential property and which has demonstrated experience in carrying out such activities in the State of New Jersey.

     "Sponsor" means a non-profit community development corporation, a non-profit housing counseling organization, or a public entity, including a municipality, county, or a municipal or county authority.

     "Trained foreclosure prevention and default mitigation counselor" means a housing counselor employed by a HUD certified housing counseling agency who has successfully completed a foreclosure prevention and default mitigation training course provided by a nationally recognized homeownership education and counseling organization such as course HO345d-rq "Foreclosure Intervention and Default Counseling Certification Part I" provided by the NeighborWorks America Center for Homeownership Education and Counseling.

(cf: P.L.2008, c.127, s.9)

     9.    Section 10 of P.L.2008, c.127 (C.55:14K-90) is amended to read as follows:

     10.  a.  There is established in the New Jersey Housing and Mortgage Finance Agency [a] an Interim Financing and Housing Assistance and [Recovery Program (HARP)] Support Fund, for the purpose of providing support and aid to any sponsor who establishes a Housing Assistance and Recovery Program which meets the [following] requirements of sections 10 or 11 of P.L.    , c.    (C.      ) (pending before the Legislature as this bill)[The sponsor shall:

     (1)   upon application to the commissioner, be certified by the commissioner as eligible to participate in the Housing Assistance and Recovery Program;

     (2)   employ trained foreclosure prevention and default mitigation counselors or contract with a HUD certified counseling agency that employs trained foreclosure prevention and default mitigation counselors;

     (3)   provide counseling to the homeowner both before and after the execution of a lease-purchase agreement, which shall include contact information for legal services programs within the county where the property is located;

     (4)   screen and assess the eligibility of homeowners to repurchase the property and sustain the homeowner's mortgage payments;

     (5)   have prior experience in (a) negotiating mortgage debt reduction from lenders, and (b) the purchase of distressed properties; and

     (6)   receive a commitment from a regulated financial institution or a government entity for a line of credit or other financing mechanism to purchase properties under a housing assistance and recovery program.]

     b.    [The lease-purchase agreement shall:

     (1)   include terms and conditions under which the sponsor shall convey the property to the homeowner at the expiration of the agreed upon use and occupancy period;

     (2)   enable the homeowner to continue to live in the property during the use and occupancy period for an affordable rent; and

     (3)   include a provision that the property will be sold back to the homeowner at a price not to exceed the price at which the sponsor purchased the property, plus any reasonable sponsor funded repair and maintenance costs.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     c.     [Monies from the fund may be allocated solely for:

     (1)   appraisal of the property to determine current market value;

     (2)   construction and rehabilitation of the property to ensure compliance with all codes and standards;

     (3)   payment of property taxes accrued during the sponsor's ownership of the property;

     (4)   maintenance of property insurance, including, but not limited to landlord liability and fire insurance coverage;

     (5)   payment of no more than $25,000 toward the difference between the appraised value and the purchase price of the property; and

     (6)   any other activity the agency deems necessary to effectuate the purposes of the program.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     d.    [No money allocated from the fund shall be used for the purchase of real property, other than as provided for in paragraph (5) of subsection c. of this section.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

     e.     [The agency shall conduct a quarterly audit of all funds received and expended for the program.  The agency shall issue an annual report at the end of the State fiscal year detailing the result of the quarterly audits for the prior State fiscal year.  The annual report shall be completed no more than 60 days after the end of the State fiscal year.  The annual report shall be provided to the commissioner and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature and made available to the public on the Department of Community Affairs website.]  (Deleted by amendment, P.L.    , c.    .) (pending before the Legislature as this bill)

(cf: P.L.2008, c.127, s.10)

 

     10.  (New section)  a.  In order to participate in the Housing Assistance and Recovery Program a sponsor shall:

     (1)   upon application to the commissioner, be certified by the commissioner as eligible to participate in the Housing Assistance and Recovery Program;

     (2)   employ trained foreclosure prevention and default mitigation counselors or contract with a HUD certified counseling agency that employs trained foreclosure prevention and default mitigation counselors;

     (3)   provide counseling to the homeowner both before and after the execution of a lease-purchase agreement, which shall include contact information for legal services programs within the county where the HARP property is located;

     (4)   screen and assess the eligibility of homeowners to repurchase the HARP property and sustain the homeowner's mortgage payments;

     (5)   have prior experience in (a) negotiating mortgage debt reduction from lenders, and (b) the purchase of distressed properties; and

     (6)   receive a commitment from a regulated financial institution or a government entity for a line of credit or other financing mechanism to purchase properties under a housing assistance and recovery program.

     b.    The lease-purchase agreement shall:

     (1)   include terms and conditions under which the sponsor shall convey the HARP property to the homeowner at the expiration of the agreed upon use and occupancy period;

     (2)   enable the homeowner to continue to live in the HARP property during the use and occupancy period for an affordable rent; and

     (3)   include a provision that the HARP property will be sold back to the homeowner at a price not to exceed the price at which the sponsor purchased the property, plus any reasonable sponsor funded repair and maintenance costs.

     c.     Monies from the fund may be allocated solely for:

     (1)   appraisal of the HARP property to determine current market value;

     (2)   construction and rehabilitation of the HARP property to ensure compliance with all codes and standards;

     (3)   payment of property taxes accrued during the sponsor's ownership of the HARP property;

     (4)   maintenance of property insurance, including, but not limited to landlord liability and fire insurance coverage;

     (5)   payment of no more than $25,000 toward the difference between the appraised value and the purchase price of the HARP property; and

     (6)   any other activity the agency deems necessary to effectuate the purposes of the program.

     d.    No money allocated from the fund shall be used for the purchase of real property, other than as provided for in paragraph (5) of subsection c. of this section.

     e.     The agency shall conduct a quarterly audit of all funds received and expended for the program.  The agency shall issue an annual report at the end of the State fiscal year detailing the result of the quarterly audits for the prior State fiscal year.  The annual report shall be completed no more than 60 days after the end of the State fiscal year.  The annual report shall be provided to the commissioner and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature and made available to the public on the Department of Community Affairs website.

 

     11.  Section 11 of P.L.2008, c.127 (C.55:14K-91) is amended to read as follows:

     A sponsor who receives monies from the fund for a Housing Assistance and Recovery Program and the homeowner shall execute a lease-purchase agreement, not to exceed a term of 36 months, that includes the following:

     a.     The terms and conditions under which the sponsor shall convey the HARP property to the homeowner or other member of the household upon termination of the use and occupancy period;

     b.    Provisions permitting the homeowner and other members of the household to remain in the HARP property during the use and occupancy period in exchange for an affordable rent; and

     c.     A provision that the HARP property will be sold back to the homeowner or to another member of the household at a price not to exceed the price at which the sponsor purchased the property plus reasonable sponsor maintenance costs.

(cf: P.L.2008, c.127, s.11)

 

     12.  (New section)  The agency shall set aside all or part of the funds appropriated to the Housing Assistance and Interim Financing Support Fund to be used for the purpose of providing interim financing loans to qualified entities on eligible properties that have been rehabilitated under a program of neighborhood stabilization and which are to be rented to eligible households either under a rental leasehold or a lease-purchase agreement.

     a.     No less than $12 million of the funds appropriated to the Housing Assistance and Interim Financing Support Fund, or four-fifths of the remaining balance, whichever is less, shall be used to provide loans or permanent loan capital to Community Development Financial Institutions for such purposes.

     b.    In order to be eligible to receive funds under this section, the Community Development Financial Institution must demonstrate that it is financially sound and that it has experience financing housing in the State of New Jersey;

     c.     The agency or any Community Development Financial Institution receiving funds under this section shall use the funds to provide direct loans to qualified entities or provide credit enhancements for loan pools or loans by third parties to qualified entities as may be appropriate to ensure that interim financing is available upon the completion of rehabilitation for eligible properties rehabilitated as part of a program of neighborhood stabilization and which are to be rented to eligible households either under a rental leasehold or a lease-purchase agreement.

     d.    The agency or any Community Development Financial Institution receiving funds under this section shall maximize the extent to which those funds will leverage private financing.

     e.     All loans made under this section shall be secured by a mortgage on the subject property and shall carry a term of no more than three years.

     f.     Community Development Financial Institutions receiving funds under this section shall adopt written loan criteria for all loans made or credit enhancements provided, which shall take into account the development capacity and financial soundness of the loan recipient, market conditions in the areas in which eligible properties are located, cash flow during the term of the loan, and the likelihood of refinancing at the end of the term either from sale of the property or refinancing of the loan.

     g.     Community Development Financial Institutions receiving funds under this section shall provide semi-annual reports to the agency on activities carried out with those funds.

 

     13.  Section 14 of P.L.2008, c.127 is amended to read as follows:

     14.  Notwithstanding the provisions of P.L.2008, c.22 (C.52:9H-2.1 et al.), there is appropriated from the Long Term Obligation and Capital Expenditure Fund the sum of $15,000,000 to the Interim Financing and Housing Assistance and [Recovery Program (HARP)] Support Fund, for the purposes of effectuating the New Jersey Housing Assistance and Recovery or Interim Financing Program, of which five percent may be used for the purposes of administering the program.

 

     14.  (New section)  In addition to the uses specified for the Mortgage and Neighborhood Stabilization Financing Program Fund created by section 5 of P.L.2008, c.127 (C.55:14K-86) and for the Interim Financing and Housing Assistance and Support Fund created by section 10 of P.L.2008, c.127 (C.55:14K-90), the agency may use up to $3,000,000 from each program fund for the following purposes: (1) to make grants to qualified non-profit agencies to support counseling and legal assistance on behalf of owner-occupant households in foreclosure or at risk of foreclosure; and (2) for the Mortgage Assistance Pilot Program, to supplement funds available for that program, with the division of the funds made available under this section between these two programs to be at the discretion of the agency.

 

     15.  This act shall take effect immediately.

 

 

STATEMENT

 

     The purpose of this bill is to make the $40 million appropriated to the Mortgage Stabilization Program and the HARP programs available for other programs that are currently assisting homeowners.  The MSP and HARP programs have failed to live up to their initial expectations due to technical problems with those programs.  As a result, the appropriation is largely intact and is not being used for the intended purposes.