Assemblywoman BONNIE WATSON COLEMAN
District 15 (Hunterdon and Mercer)
Assemblyman TROY SINGLETON
District 7 (Burlington)
Assemblywoman SHAVONDA E. SUMTER
District 35 (Bergen and Passaic)
Codifies the Judiciary's Foreclosure Mediation Program; appropriates $2,500,000.
CURRENT VERSION OF TEXT
An Act concerning foreclosure mediation, supplementing Title 2A of the New Jersey Statutes, and making an appropriation.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the “New Jersey Foreclosure Mediation Act.”
2. a. The Legislature finds and declares that the New Jersey Judiciary established a Foreclosure Mediation Program in 2009 in response to the increase in residential foreclosures. This act ensures the continuation of mediation services provided under that program to assist homeowners and lenders in pursuing a mutually agreeable alternative to mortgage foreclosure litigation and to avoid the harmful effects of residential property foreclosure on homeowners, families and communities.
b. For the purposes of this act:
"Eligible property" means an owner-occupied one- to three-family residential property that is the homeowner-borrower’s primary residence.
"Foreclosure Mediation Program" or "mediation program" means the New Jersey Judiciary's Foreclosure Mediation Program as authorized by the Supreme Court of New Jersey.
"Homeowner-borrower" means the borrower on a mortgage loan for an eligible property that is subject to a foreclosure complaint filed by the lender or an assignee.
3. Upon the filing of a mortgage foreclosure complaint against an eligible property, the homeowner-borrower shall receive notice of the option to participate in the Foreclosure Mediation Program in accordance with the court rules, procedures, and guidelines adopted by the Supreme Court.
4. a. (1) A court may order mediation whenever a homeowner-borrower files an answer to a foreclosure complaint.
(2) Alternatively, the homeowner-borrower may initiate the process for scheduling mediation by submitting a mediation request along with any other documents required by the Supreme Court. The deadline for mediation request submission shall be determined by the court rules, procedures, and guidelines adopted by the Supreme Court.
b. After requesting mediation, the homeowner-borrower may seek to stay the sheriff’s sale in accordance with applicable court rules and procedures.
c. The homeowner-borrower shall not be required to pay any fees to participate in the mediation program.
5. a. Whenever a homeowner submits a mediation request or is ordered to participate in the mediation program, the homeowner may be responsible for submitting a certification document, confirming that the homeowner meets the definition of a homeowner-borrower and that the property being foreclosed upon continues to be an eligible property pursuant to subsection b. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. Each party shall participate in foreclosure mediation in good faith. A good faith effort includes, but is not limited to, the mortgagee or the mortgagee’s servicer attending the mediation session in person or by telephone through a person with the authority to consider alternatives to foreclosure so that the parties may reach a mutually acceptable loan modification, loan workout, refinancing agreement, or other resolution. If any party or attorney for a party fails to attend a mediation session or to make a good faith effort to mediate, the court, in addition to any sanction the court deems appropriate, may sanction a party or attorney for a violation of this subsection with a civil penalty of up to $1,000 or allow a party to recover reasonable attorney’s fees or litigation expenses, or both. In determining the type of sanction to impose against a party, the court may consider whether the conduct was intentional and whether the party has engaged in a pattern of similar conduct.
6. There is appropriated from the General Fund to the Judiciary the sum of $2,500,000 for operation of the Judiciary’s Foreclosure Mediation Program and to enhance the integrity of the mortgage foreclosure review process. The Judiciary may transfer to other agencies such sums as are necessary for operation of the program.
7. This act shall take effect immediately.
New Jersey’s Foreclosure Mediation Program was established in 2009 by the New Jersey Judiciary in response to an alarming increase in residential foreclosures. This act ensures the Foreclosure Mediation Program’s continuation by establishing it in statute, and strengthens the program to more effectively protect home ownership in New Jersey.
The bill authorizes eligible homeowners to submit a mediation request, thereby initiating the process of scheduling a mediation session with their lender. Along with the mediation request, the homeowner may be required to submit additional information that may be necessary for creating a loan modification, or other agreement, but will not have to pay any fees to participate in the program. The bill requires lenders to have a representative attend the mediation session, either in person or by telephone, who has authority to reach a mutually acceptable loan modification, loan workout, refinancing agreement, or other resolution. If either party fails to attend a mediation session or make a good faith effort to mediate, courts will have the authority to penalize the party through a fine of up to $1,000, through allowing the other party to recover reasonable attorney’s fees and litigation expenses, or through any other sanction the court deems appropriate.
The bill would also appropriate $2,500,000 from the General Fund for operation of the program and to enhance the integrity of the mortgage foreclosure review process.