ASSEMBLY, No. 4034

STATE OF NEW JERSEY

219th LEGISLATURE

 

INTRODUCED MAY 7, 2020

 


 

Sponsored by:

Assemblyman  BENJIE E. WIMBERLY

District 35 (Bergen and Passaic)

 

 

 

 

SYNOPSIS

     Authorizes Governor to permit mortgage forbearance and rent payment responsibility reduction for residential property owners and tenants during emergency circumstances; concerns consumer reporting during coronavirus disease 2019 pandemic.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning protections for residential property owners and tenants during emergency circumstances, amending P.L.2020, c.1, and supplementing Title 52 of the Revised Statutes.

 

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

 

     1.  (New section)  a.  Notwithstanding any other law, ordinance, rule or regulation to the contrary, whenever a Public Health Emergency, pursuant to the “Emergency Health Powers Act,” P.L.2005, c.222 (C.26:13-1 et seq.), or a State of Emergency, pursuant to P.L.1942, c.251 (C.App.A.9-33 et seq.), or both, has been declared by the Governor and is in effect, the Governor may issue an executive order to declare that an emergency-impacted homeowner may apply, pursuant to subsection c. of this section, for a certification of eligibility for an emergency-impacted mortgage forbearance. 

     b.  An emergency-impacted mortgage forbearance executive order shall indicate the length of time, not to exceed three months, that each individual emergency-impacted mortgage forbearance shall remain in effect, which period shall commence upon approval and issuance of a certification of eligibility by the reviewing entity of the emergency-impacted homeowner’s application. 

     c.     (1)  An emergency-impacted mortgage forbearance executive order shall indicate whether emergency-impacted homeowners shall apply to the commissioner, or to another administrative agent, as the reviewing entity for emergency-impacted mortgage forbearances. 

     (2)   An emergency-impacted homeowner may apply on forms to be provided by the department for a certification of eligibility for an emergency-impacted mortgage forbearance.  The application shall be submitted in accordance with a deadline to be established by an emergency-impacted mortgage forbearance executive order.  The reviewing entity shall approve an application and grant a certification of eligibility or deny an application within 30 days of its delivery.  If the application is not approved or denied within 30 days of its delivery, the application shall be deemed approved.

     (3)  The forms provided by the department shall include collection of docket numbers, party names, and property addresses as to any pending court actions involving any property that is the subject of the emergency-impacted mortgage forbearance application.  An emergency-impacted homeowner shall be eligible for an emergency-impacted mortgage forbearance regardless of whether the residential property is already the subject of a foreclosure proceeding prior to the effective date of an emergency-impacted mortgage forbearance executive order.  The reviewing entity shall provide the docket numbers, party names, and property addresses as to any pending court actions involving any property granted a certification of eligibility to the Superior Court Clerk’s Office at least monthly.  If the reviewing entity is a bank, the bank shall submit information on all emergency-impacted mortgage forbearance applications submitted, approved, and denied to the Department of Banking and Insurance on a bi-weekly basis.

     (4) (a)  Notwithstanding the provisions of any law, rule, or regulation to the contrary, the repayment period of any mortgage subject to the emergency-impacted mortgage forbearance established pursuant to this section shall be extended by the number of months the emergency-impacted mortgage forbearance is in effect. 

     (b)   During the time of the emergency-impacted mortgage forbearance, and during the period constituting an extension of the mortgage, all terms and conditions of the original mortgage, except with regard to default and delinquency during forbearance, shall continue without modification, and there shall be no fees assessed for the forbearance, or penalty for early repayment.

     (c)  If a foreclosure action is filed with the court only as a result of not receiving mortgage payments from an emergency-impacted homeowner during the time period of the emergency-impacted homeowner’s forbearance, the homeowner may assert the receipt of an emergency-impacted mortgage forbearance as an affirmative defense. 

     (5)  (a)  An emergency-impacted homeowner who applies for a forbearance on a property as its landlord shall only be eligible for an emergency-impacted mortgage forbearance if the homeowner commits to providing any emergency-impacted tenant residing in the residential property with an emergency rent reduction period.  An emergency-impacted mortgage forbearance executive order may direct that, when applying for an emergency-impacted mortgage forbearance as a landlord, the emergency-impacted homeowner shall indicate the number of residential tenants residing in the residence, the amount of rent charged to each residential tenant, contact information for each residential tenant, whether any tenant’s rent is subsidized by the federal Housing Choice Voucher (Section 8) Program or other subsidy, and provide any additional information deemed necessary.

     (b)   If directed in an emergency-impacted mortgage forbearance executive order the availability of a forbearance to a residential landlord shall be restricted to a landlord of a building registered as a multiple dwelling pursuant to the "Hotel and Multiple Dwelling Law," P.L.1967, c.76 (C.55:13A-1 et seq.).

     (c)  If while in receipt of a certification of eligibility for an emergency-impacted mortgage forbearance, the landlord willfully refuses to provide an emergency-impacted tenant with an emergency rent reduction period, the landlord shall be deemed in violation of the emergency-impacted mortgage forbearance executive order, which violation shall authorize the tenant to assert the executive order as an affirmative defense in a landlord-tenant action for non-payment of associated rent or habitual lateness of associated rent payments.  Upon tenant’s failure to timely pay the rent arrearage to the landlord in accordance with the emergency-impacted mortgage forbearance executive order, if rent arrearage repayment is required by the executive order, the executive order and the provisions herein shall no longer apply to the tenant.

     (6)  An emergency-impacted tenant whose landlord has been approved for a certification of eligibility for an emergency-impacted mortgage forbearance may apply to the landlord for an emergency rent reduction period, unless directed by an emergency-impacted mortgage forbearance executive order to apply to an alternative administrative agent.  An emergency-impacted mortgage forbearance executive order shall establish whether other forms of financial relief obtained by the landlord, in addition to a certification of eligibility for an emergency-impacted mortgage forbearance, shall also authorize the landlord’s emergency-impacted tenant to apply for an emergency rent reduction period.  An emergency-impacted tenant shall be provided with the level of rent reduction directed by an emergency-impacted mortgage forbearance executive order.  An emergency-impacted mortgage forbearance executive order may authorize the rent reduction provided during an emergency rent reduction period to exceed any limitation on rent increases established by a “Notice of Rent Protection Emergency,” pursuant to P.L.2002, c.133 (C.2A:18-61.62 et seq.).  The application deadline for an emergency rent reduction period shall be established by an emergency-impacted mortgage forbearance executive order.

     (7)  (a) An emergency-impacted mortgage forbearance executive order may provide the following protections to residential tenants regardless of whether the tenant’s landlord has obtained a forbearance:

     (i) landlord-tenant proceedings shall not be initiated during the time provided in the executive order, unless the court determines on its own motion or motion of the parties that enforcement is necessary in the interest of justice;

     (ii) prohibit landlords from imposing late fees on residential tenants; and

     (iii) establish a 90-day repayment window applied individually to each month of rent arrears for a residential tenant, beginning with the first day of the second month next following the conclusion of both the state of emergency and public health emergency established pursuant to subsection a. of this section, to be applicable unless a landlord and tenant negotiate a longer repayment schedule for each individual month of rent arrears. 

     (b)  If a landlord willfully refuses to comply with any provision of subparagraph (a) of this paragraph, the landlord shall be deemed in violation of the emergency-impacted mortgage forbearance executive order, which violation shall authorize the tenant to assert the executive order as an affirmative defense in a landlord-tenant action for non-payment of associated rent or habitual lateness of associated rent payments.  Upon tenant’s failure to timely pay the rent arrearage to the landlord in accordance with the emergency-impacted mortgage forbearance executive order, the executive order and the provisions herein shall no longer apply to the tenant.

     (8)  An emergency-impacted mortgage forbearance executive order shall provide that the repayment schedule established by sub-subparagraph (iii) of subparagraph (a) of paragraph (7) of this subsection shall apply either:

     (a)  to rent unpaid by a residential tenant, including an emergency-impacted tenant and a tenant whose landlord has not obtained a forbearance, for rent unpaid during an emergency rent reduction period, pursuant to paragraph (6) of this subsection; or

     (b)  exclusively to rent unpaid by a residential tenant who did not obtain an emergency rent reduction period, in which case an emergency-impacted tenant, who obtained an emergency rent reduction period in association with the landlord’s forbearance, shall not be required to repay the rent unpaid pursuant to the emergency rent reduction period.

     d.    (1)     No later than one month following the effective date of this act, the commissioner, to the greatest extent reasonably possible,  shall:

     (a)   notify homeowners of the emergency-impacted mortgage forbearance program;

     (b)   notify landlords who may apply for a certification of eligibility for an emergency-impacted mortgage forbearance, or other qualifying financial relief, of their responsibilities to alert their residential tenants of the option, if emergency-impacted, to apply for an emergency rent reduction period.

     (c)   post information on eligibility and the application process for an emergency-impacted mortgage forbearance, and make forbearance applications available, on the department's Internet website;

     (d)   notify the Superior Court Clerk’s Office of the individuals and associated residential properties that are granted a certification of eligibility for an emergency-impacted mortgage forbearance in accordance with paragraph (3) of subsection c. of this section;

     (e)   notify the State's active banks of the individuals and associated residential properties that are eligible for a forbearance; and

     (f)  provide tenants with a copy of the certification of eligibility granting the landlord an emergency-impacted mortgage forbearance.

     (2)   Upon knowledge of a homeowner's eligibility for an emergency-impacted mortgage forbearance, the bank shall notify the homeowner.

     (3)   Upon approval of a certification of eligibility for an emergency-impacted mortgage forbearance application pursuant to subsection c. of this section, the reviewing entity shall notify the applicant, any residential tenants, and the bank.

     e.     Emergency-impacted homeowners awarded a certification of eligibility for an emergency-impacted mortgage forbearance under this section shall be responsible for the maintenance of the property during the period of forbearance.  A property subject to an emergency-impacted mortgage forbearance that becomes vacant and abandoned pursuant to section 1 of P.L.2012, c.70 (C.2A:50-73) may be foreclosed upon in accordance with the residential mortgage foreclosure procedures set out in the "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et seq.), or by filing a summary action to foreclose a mortgage debt secured by residential property that is vacant and abandoned pursuant to section 1 of P.L.2012, c.70 (C.2A:50-73). 

     f.     Nothing in this section shall be construed as limiting the ability of a bank and residential property owner to participate in foreclosure mediation sponsored by the Administrative Office of the Courts in accordance with “New Jersey Foreclosure Mediation Act,” P.L.2019, c.64 (C.2A:50-74 et. seq.).  Nothing in this section shall be construed to impact property tax and insurance obligations of a property owner related to any real property in the State.

     g.  An emergency-impacted mortgage forbearance executive order may limit the application of this section to avoid affecting any mortgage loans made, insured, or securitized by any agency or instrumentality of the United States, any Government Sponsored Enterprise, or a Federal Home Loan Bank, or the rights and obligations of any lender, issuer, servicer or trustee of such obligations, including servicers for the Government National Mortgage Association.  An emergency-impacted mortgage forbearance executive order may further limit the application of this section as determined necessary to comply with federal law.

     h.    As used in this section:

     “Bank” means the mortgage lender or servicer for the primary residence of the emergency-impacted homeowner.

     “Commissioner” means the Commissioner of Community Affairs.

     “Department” means the Department of Community Affairs.

     “Emergency-impacted homeowner” means a homeowner, including, but not limited to, an owner of a residential property serving as the owner’s primary residence, or person or business entity serving as the landlord of a residential property, who is subject to a substantial loss of income, in accordance with the terms of an emergency-impacted mortgage forbearance executive order, resulting from a Public Health Emergency, declared pursuant to the “Emergency Health Powers Act,” P.L.2005, c.222 (C.26:13-1 et seq.), or a State of Emergency, declared pursuant to P.L.1942, c.251 (C.App.A.9-33 et seq.). 

     “Emergency-impacted mortgage forbearance” or “forbearance” means a period of time during which obligations for mortgage and interest payments are suspended.

     “Emergency-impacted mortgage forbearance executive order” means an executive order issued pursuant to subsection a. of this section.

     “Emergency-impacted tenant” means a tenant of a residential property, who occupies the property as the tenant’s primary residence, and who is subject to a substantial loss of income, in accordance with the terms of an emergency-impacted mortgage forbearance executive order, resulting from a Public Health Emergency, declared pursuant to the “Emergency Health Powers Act,” P.L.2005, c.222 (C.26:13-1 et seq.), or a State of Emergency, declared pursuant to P.L.1942, c.251 (C.App.A.9-33 et seq.).

     “Emergency rent reduction period” means a period of time during which an emergency-impacted tenant is provided with a reduction in rent payment responsibilities, pursuant to paragraph (6) of subsection c. of this section, and if required by the emergency-impacted mortgage forbearance executive order, during which repayment is extended by 90 days for each month of unpaid rent during the state of emergency and public health emergency.

     “Residential property” means any property rented or owned for residential purposes, including, but not limited to, any house, building, mobile home or land in a mobile home park, or tenement leased for residential purposes, but shall not include any hotel, motel, or other guest house, or part thereof, rented to a transient guest or seasonal tenant, or a residential health care facility.

     “Reviewing entity” means the entity designated in an emergency-impacted mortgage forbearance executive order, pursuant to paragraph (1) of subsection c. of this section, with reviewing emergency-impacted mortgage forbearance applications submitted by emergency-impacted homeowners.  An emergency-impacted mortgage forbearance executive order may designate the commissioner, the commissioner’s designee, the bank, or another administrative agent as the reviewing entity.

     i.     The Commissioner of Community Affairs, and the Commissioner of Banking and Insurance, as appropriate, shall, pursuant to the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt such rules and regulations as shall be necessary to implement the provisions of this section no later than one month following the effective date of this act.  The rules and regulations adopted by the Commissioner of Community Affairs and the Commissioner of Banking and Insurance may adjust and supplement the provisions of an emergency-impacted mortgage forbearance executive order, as long as those adjustments and additions do not conflict with this section.

 

     2.  (New section)  a.  (1)  No consumer reporting agency shall include any adverse information that is a result of the coronavirus disease 2019 pandemic in a consumer report pertaining to an affected person who provides the agency with notice pursuant to subsection b. of this section.

      (2)  No user of a consumer report shall consider any adverse information that is a result of the coronavirus disease 2019 pandemic in a consumer report pertaining to an affected person who provides the user with notice pursuant to subsection b. of this section.

      b.   (1) An affected person may contact any consumer reporting agency and request that the agency disregard any adverse information related to the person obtained by the agency with respect to the period beginning with the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103 of 2020 and extending 90 days following the end of that public health emergency and state of emergency.

      (2)  Any consumer reporting agency that receives a request pursuant to paragraph (1) of this subsection shall respond to the affected person and the Director of the Division of Consumer Affairs in the Department of Law and Public Safety within five days of receiving the request.

      (3)  An affected person may contact any user of a consumer report and request that the user disregard any adverse information related to the person in a consumer report with respect to the period beginning with the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103 of 2020 and extending 90 days following the end of that public health emergency and state of emergency.

      (4)  Any user of a consumer report that receives a request pursuant to paragraph (3) of this subsection shall respond to the affected person and the Director of the Division of Consumer Affairs in the Department of Law and Public Safety within five days of receiving the request.

      c.   No charge shall be imposed by a consumer reporting agency pursuant to section 10 of P.L.1997, c.172 (C.56:11-37) with respect to a request made by a consumer pursuant to this section.

      d.   As used in this section:

      “Affected person” means a borrower who is a resident of this State and has suffered financial hardship as a result of the coronavirus disease 2019 pandemic.

      “Borrower” means a person who is named as a borrower or debtor in a consumer, student, or other consumer loan or extension of credit.

      “User of a consumer report” means any person or entity that is furnished a consumer report for a purpose that is permissible pursuant to section 4 of P.L.1997, c.172 (C.56:11-31).

 

     3.  Section 1 of P.L.2020, c.1 (C.2A:18-59.3) is amended to read as follows:

      1. a. Notwithstanding any other law to the contrary, whenever a Public Health Emergency, pursuant to the "Emergency Health Powers Act," P.L.2005, c.222 (C.26:13-1 et seq.), or a State of Emergency, pursuant to P.L.1942, c.251 (C.App.A.9-33 et seq.), or both, has been declared by the Governor and is in effect, the Governor may issue an executive order to declare that a lessee, tenant, homeowner or any other person shall not be removed from a residential property as the result of an eviction or foreclosure proceeding.  This executive order shall remain in effect for no longer than two months following the end of the Public Health Emergency or State of Emergency.  An executive order issued pursuant to this subsection may be adjusted by a subsequent executive order.

      b.  Eviction and foreclosure proceedings may be initiated or continued during the time of an executive order issued pursuant to this section [, but enforcement] , unless otherwise provided in the executive order issued pursuant to subsection a. of this section.  Enforcement of all judgments for possession, warrants of removal, and writs of possession shall be stayed during this period if the Governor has issued an executive order prohibiting certain removals from residential property pursuant to subsection a. of this section, unless the court determines on its own motion or motion of the parties that enforcement is necessary in the interest of justice. 

      c.   Sheriffs, court officers, and their agents shall refrain from acting to remove individuals from residential properties through the eviction or foreclosure processes during the time of an executive order issued by the Governor prohibiting certain removals from residential property pursuant to subsection a. of this section, unless the court determines on its own motion or motion of the parties that removal is necessary in the interest of justice. 

      d.   As used in this section, "residential property" means any property rented or owned for residential purposes, including, but not limited to, any house, building, mobile home or land in a mobile home park, or tenement leased for residential purposes, but shall not include any hotel, motel, or other guest house, or part thereof, rented to a transient guest or seasonal tenant, or a residential health care facility.

(cf: P.L.2020, c.1)

 

     4.  This act shall take effect immediately and shall be retroactive to March 9, 2020.

 

 

STATEMENT

 

     This bill would allow the Governor to permit emergency-impacted mortgage forbearances and rent payment responsibility reductions for certain emergency-impacted residential property owners and tenants when a state of emergency or public health emergency has been declared.  The bill would also establish consumer reporting protections in relation to the COVID-19 pandemic.

     This bill would provide that, whenever a public health emergency or a state of emergency is declared by the Governor and is in effect, the Governor may issue an executive order to provide that emergency-impacted homeowners, who have sustained a substantial loss of income, may apply for an emergency-impacted mortgage forbearance, meaning a period of time, not to exceed three months, during which obligations for mortgage and interest payments are suspended.

     Under the bill, an emergency-impacted homeowner would apply to the Commissioner of Community Affairs, or to an alternative administrative agent serving as the reviewing entity, if directed by the executive order, for a certification of eligibility for the forbearance.  The commissioner, or other reviewing entity, would approve or deny an application within 30 days.  If the application is not approved or denied within 30 days of delivery, it would be deemed approved.

     The forbearance period of an emergency-impacted homeowner would conclude three months following the commencement of the forbearance period, which period would commence upon application approval. 

     The repayment period of any mortgage subject to a forbearance would be extended by the number of months the forbearance is in effect.  During the time of the forbearance and during the period constituting an extension of the mortgage, all terms and conditions of the original mortgage, except with regard to default and delinquency during forbearance, would continue without modification, and there would be no fees assessed for the forbearance, or penalty for early repayment.

     The bill includes qualifying residential landlords in its definition of emergency-impacted homeowners. However, if directed in an emergency-impacted mortgage forbearance executive order, the availability of a forbearance to a residential landlord would be restricted to a landlord of a building registered as a multiple dwelling pursuant to the “Hotel and Multiple Dwelling Law.”

     An emergency-impacted homeowner who applies for a forbearance on a property as its landlord would only be eligible for a forbearance if the homeowner commits to providing any emergency-impacted tenant residing in the residential property with an emergency rent reduction period, consisting of a temporary reduction in rent payment responsibilities. 

     An emergency-impacted tenant whose landlord has been provided with a forbearance would apply to the landlord for an emergency rent reduction period, unless directed by the emergency-impacted mortgage forbearance executive order to apply to an alternative administrative agent.  The emergency-impacted mortgage forbearance executive order would establish whether other forms of financial relief obtained by the landlord, in addition to a forbearance, would also authorize the landlord’s emergency-impacted tenant to apply for an emergency rent reduction period.  An emergency-impacted tenant would be provided with the level of rent reduction directed by the emergency-impacted mortgage forbearance executive order.  The executive order may authorize the rent reduction provided during an emergency rent reduction period to exceed any limitation on rent increases established by a “Notice of Rent Protection Emergency,” that may have been issued by the Governor.  If provided by the executive order, rent left unpaid by a tenant whose landlord has a forbearance, in accordance with an emergency rent reduction, would not have to be repaid at a later date. 

     Under the bill, an emergency-impacted mortgage forbearance executive order may provide the following protections to residential tenants regardless of whether the tenant’s landlord has obtained a forbearance:

·        that eviction proceedings shall not be initiated during the time provided in the executive order, unless the court determines on its own motion or motion of the parties that enforcement is necessary in the interest of justice;

·        A prohibition preventing landlords from imposing late fees on residential tenants; and

·        A 90-day repayment window applied individually for each month of rent arrears for a residential tenant, beginning with the first day of the second month next following the conclusion of both the state of emergency and public health emergency.  If indicated by the executive order, however, this repayment requirement would not apply to certain rent left unpaid by a tenant whose landlord has a forbearance.

     Prior to one month following the effective date of this bill, the bill directs the commissioner, to the greatest extent reasonably possible, to:

·        notify homeowners of the forbearance program;

·        notify landlords who may obtain a forbearance, or other qualifying financial relief, of their responsibilities to alert their tenants of the option, if emergency-impacted, to apply for an emergency rent reduction period;

·        post information on eligibility and the application process for the forbearance, and make forbearance applications available, on DCA's website;

·        notify the Superior Court Clerk’s Office of the individuals and associated residential properties that are granted a certification of eligibility for a forbearance;

·        notify the State's active mortgage lenders of the individuals and associated residential properties that are eligible for a forbearance; and

·        provide tenants with a copy of the certification of eligibility granting their landlord a forbearance.

     Under the bill, upon knowledge of a homeowner's eligibility for a forbearance, the mortgage lender would notify the homeowner.  Upon approval of a forbearance application, the reviewing entity would notify the homeowner.

     Emergency-impacted homeowners awarded a forbearance under this bill would be responsible for the maintenance of the property during the period of forbearance.  The bill would not be construed to impact property tax and insurance obligations of a property owner related to any real property in the State.

     The bill directs the Commissioner of Community Affairs to adopt the rules and regulations necessary for implementation no later than one month following enactment.  The emergency-impacted mortgage forbearance executive order, or the rules and regulations adopted by the commissioner, may limit the bill’s application to non-federally-guaranteed mortgages, and may further limit its application as deemed necessary to comply with federal law.  Additionally, the commissioners’ rules and regulations would be able to adjust and supplement the provisions of the initial executive order, as long as those adjustments and additions would not conflict with the bill. 

      Additionally, the bill provides that no consumer reporting agency shall include, and no user of a consumer report shall consider, any adverse information in a consumer report that is a result of the coronavirus disease 2019 pandemic, with respect to an affected person who provides the agency or user notice pursuant to the bill.

      Under the bill, an affected person may contact any consumer reporting agency or user of a consumer report and request that the agency or user disregard any adverse information related to the person obtained by the agency or user with respect to the period beginning with the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103 of 2020 and extending 90 days following the end of that public health emergency and state of emergency.

     The bill requires any consumer reporting agency or user of a consumer report that receives a request to respond to the affected person and the Director of the Division of Consumer Affairs in the Department of Law and Public Safety within five days of receiving the request.