FISCAL NOTE

[First Reprint]

ASSEMBLY, No. 1029

STATE OF NEW JERSEY

217th LEGISLATURE

 

DATED: DECEMBER 18, 2017

 

 

SUMMARY

 

Synopsis:

Codifies the Judiciary's Foreclosure Mediation Program; dedicates monies from foreclosure filing fees and fines.

Type of Impact:

Foreclosure Mediation Fund revenue and expenditure.

Agencies Affected:

Judiciary

 

Judicial Estimate

Fiscal Impact

Year 1 

Year 2 

Year 3 

 

State Cost

Indeterminate – See Comments Below

 

State Revenue

$1,700,000

$1,700,000

$1,700,000

 

 

 

 

·         The Office of Legislative Services (OLS) concurs with the Judicial estimate.

·         The Administrative Office of the Courts (AOC) estimates, based on the number of foreclosure cases filed in recent years, that 34,000 foreclosure cases would be filed annually.  The new $50 fee for each foreclosure complaint would result in $1,700,000 collected and deposited into the “Foreclosure Mediation Fund.” The AOC adds that although it is unable to estimate the revenue generated via the civil penalties, prior experience with parties participating in the Foreclosure Mediation Program suggests that revenue generated via civil penalties would be nominal. 

·         The AOC also notes that although it believes the funds deposited into the “Foreclosure Mediation Fund” would be enough to support the New Jersey Foreclosure Mediation Program, it is unable to provide a reliable estimate regarding expenditures associated with the program.

 

 

BILL DESCRIPTION

 

      Assembly Bill No. 1029 (1R) of 2016, codifies into State law New Jersey’s Foreclosure Mediation Program, established in 2009 by the New Jersey Judiciary in response to a significant increase in residential foreclosures.  This bill also strengthens the program to more effectively protect home ownership in New Jersey.

      The bill requires that, at the time the homeowner-borrower receives a notice of intention to foreclose, a homeowner-borrower must receive written notice of the option to participate in the Foreclosure Mediation Program.  Upon the filing of a mortgage foreclosure complaint against an eligible property, the homeowner-borrower must again receive written notice of the option to participate in the Foreclosure Mediation Program.  The written notice must be available in both English and Spanish.

      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 provides that in each action for foreclosure, a plaintiff will be required to pay a fee of $50 to the clerk of the court, in addition to the fee associated with filing the first paper, which fee amount is currently set at $250 pursuant to R.1:43 of the Rules of Court.

      The bill also creates a dedicated, non-lapsing fund within the General Fund to be known as the “Foreclosure Mediation Fund.”  The fund would be comprised of the $50 fee established in the bill, along with all fines imposed on lenders for noncompliance with obligations of the mediation program.

 

 

FISCAL ANALYSIS

 

JUDICIAL BRANCH

 

Administrative Office of the Courts

      The AOC estimates that based on the number of foreclosure cases filed in recent years, 34,000 foreclosure cases would be filed annually.  The new $50 fee for each foreclosure complaint would result in $1,700,000 (34,000 filings x $50) collected and deposited into the “Foreclosure Mediation Fund.”  The AOC adds that although it is unable to estimate the revenue generated via the civil penalties, prior experience with parties participating in the Foreclosure Mediation Program suggests that revenue generated via civil penalties would be nominal.  The AOC also notes that although it believes the funds deposited into the “Foreclosure Mediation Fund” would be enough to support the New Jersey Foreclosure Mediation Program, it is unable to provide a reliable estimate regarding expenditures associated with the program.

 

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concurs with the Judicial analysis. As to the AOC’s comment concerning expenditures, the OLS notes that since the current costs of the Foreclosure Mediation Program were not provided by the AOC and are not independently reported elsewhere, it is unclear whether the increase in current costs that are likely to result from inflation and contractual wage and benefits increases will be within the amount of increased revenue generated by the bill during the years covered by this estimate. If cost increases were to be equal to or less than estimated increased revenues, then assuming contractual cost increases and inflation equaled 10% annually, current annual costs would be equal to or less than $15-17 million.

 

Section:

Judiciary

Analyst:

Raughley, Anne C.

 Principal Fiscal Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

This fiscal note has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).