irst Reprint]

SENATE, No. 406

 

STATE OF NEW JERSEY

 

INTRODUCED JANUARY 18, 1996

 

 

By Senator BRYANT

 

 

An Act establishing a mortgage assistance program for certain law enforcement officers and firefighters, amending and supplementing P.L.1983, c.530 (C.55:14K-1 et seq.) 1[and],1 amending P.L.1992, c.78 1and supplementing chapter 16A of Title 43 of the New Jersey Statutes1.

 

    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 "Secure Neighborhood Mortgage Assistance Program."

 

    2. (New section) The Legislature finds and declares that:

    a. Some of the neighborhoods in New Jersey's older and financially strained urban municipalities are deteriorating;

    b. Frightened by rising local crime rates, families and longtime residents of these communities are abandoning them;

    c. Battered by this cycle of deterioration, crime and suburban flight, these neighborhoods are trapped in a downward spiral toward dilapidation and blight;

    d. The vitality of our urban municipalities depends upon the stability and viability of their local communities and neighborhoods;

    e. To reverse this trend and to revive these neighborhoods, the fear of crime and concern about personal physical safety must be eliminated;

    f. State aid programs which put additional law enforcement officers on duty in those neighborhoods serve to alleviate some of that fear and concern;

    g. A program designed to encourage law enforcement officers and firefighters to live in those communities would further reduce those fears and concerns and could significantly contribute to the revival of those neighborhoods; and

    h. It is, therefore, within the public interest to establish a mortgage program to assist law enforcement officers and firefighters in purchasing homes located in designated neighborhoods.

 

    3. (New section) As used in this act:

    "Agency" means the New Jersey Housing and Mortgage Finance Agency.

    "Eligible municipality" means a municipality which qualifies for State aid under the provisions of P.L.1978, c.14 (C.52:27D-178 et seq.).

    "Participating neighborhood" means a portion or portions of the eligible municipality, identified by the governing body, wherein the provisions of the program established under 1[this act] P.L......., c......(C..............)(now pending before the Legislature as this bill)1 are applicable.

    "Program" means the secure neighborhood mortgage assistance program established under 1[this act] P.L......., c......(C..............)(now pending before the Legislature as this bill)1.

    "Qualified applicant" means a fulltime law enforcement officer 1or a fulltime paid firefighter1 employed by an eligible municipality, 1[ and a fulltime paid firefighter] who, at the time of application, has at least one year of creditable service as a member of the Police and Firemen's Retirement System1.

 

    4. (New section) There is established a secure neighborhood mortgage assistance program. The purpose of the program is to provide mortgage assistance to 1[law enforcement officers and firefighters] qualified applicants1 seeking to purchase homes in specially designated neighborhoods of their employing municipality. The assistance 1[afforded under this act]1 may be in the form of low interest mortgages, minimal or no down payment requirements, or both, and such other incentives as the State Treasurer, with the advice of the New Jersey Housing and Mortgage Finance Agency, may deem appropriate to assist qualified applicants in purchasing homes in participating neighborhoods. The State Treasurer shall delegate administration of this program to the agency. To ensure that a home purchased by a qualified applicant under this program is used by the applicant as his or her primary residence1,1the agency shall require that a qualified applicant agree to maintain primary residence at that home for at least five years as a condition to the receipt of program assistance. The agency may enforce the five-year residency agreement through the use of restrictive mortgage covenants, deed restrictions or other penalties deemed appropriate by the State Treasurer, with the advice of the agency, to accomplish the Legislative purpose of encouraging residency of law enforcement officers and firefighters in participating neighborhoods. To fund this program, the State Treasurer shall designate a reasonable portion of the moneys allocated for programs designed to assist law enforcement officers and firefighters under section 4 of P.L.1992, c.78 (C.43:16A-16.11). 1Upon the expiration of P.L.1992, c.78 (C.43:16A-16.9 et seq.), funds for this program shall be available pursuant to section 8 of P.L. ...., c. .....(C............)(now pending before the Legislature as this bill).1

 

    5. (New section) The governing body of any eligible municipality, by ordinance, may determine to participate in the secure neighborhood mortgage assistance program. In addition to such other information as the agency may require, the ordinance shall set forth the participating neighborhoods, identified by their street boundaries, and identify a municipal official who shall assist each qualified applicant in preparing 1[his] an1 application to the agency and be responsible for forwarding that application to the agency. The ordinance may, if the governing body so determines, provide that the program be available only to qualified applicants who have been employed by the eligible municipality for more than a specified number of years.

 

    6. Section 5 of P.L.1983, c.530 (C.55:14K-5) is amended to read as follows:

    5. In order to carry out the purposes and provisions of this act, the agency, in addition to any powers granted to it elsewhere in this act, shall have the following powers:

    a. To adopt bylaws for the regulation of its affairs and the conduct of its business; to adopt an official seal and alter the same at pleasure; to maintain an office at such place or places within the State as it may designate; to sue and be sued in its own name;

    b. To conduct examinations and hearings and to hear testimony and take proof, under oath or affirmation, at public or private hearings, on any matter material for its information and necessary to carry out the provisions of this act;

    c. To issue subpoenas requiring the attendance of witnesses and the production of books and papers pertinent to any hearing before the agency, or before one or more of the members of the agency appointed by it to conduct a hearing;

    d. To apply to any court, having territorial jurisdiction of the offense, to have punished for contempt any witness who refuses to obey a subpoena, or who refuses to be sworn or affirmed to testify, or who is guilty of any contempt after summons to appear;

    e. To acquire by purchase, gift, foreclosure or condemnation any real or personal property, or any interest therein, to enter into any lease of property and to hold, sell, assign, lease, encumber, mortgage or otherwise dispose of any real or personal property, or any interest therein, or mortgage lien interest owned by it or under its control, custody or in its possession and release or relinquish any right, title, claim, lien, interest, easement or demand however acquired, including any equity or right of redemption, in property foreclosed by it and to do any of the foregoing by public or private sale, with or without public bidding, notwithstanding the provisions of any other law;

    f. To acquire, hold, use and dispose of its income revenues, funds and moneys;

    g. To adopt rules and regulations expressly authorized by this act and such additional rules and regulations as shall be necessary or desirable to carry out the purposes of this act. The agency shall adopt regulations which provide for consultation with housing sponsors regarding the formulation of agency rules and regulations governing the operation of housing projects and which require the agency to consult with the affected housing sponsor prior to taking any and all specific proposed agency actions relating to the sponsor's housing project. The agency shall publish all rules and regulations and file them with the Secretary of State;

    h. To borrow money or secure credit on a temporary, short-term, interim or long-term basis, and to issue negotiable bonds and to secure the payment thereof and to provide for the rights of the holders thereof;

    i. To make and enter into and enforce all contracts and agreements necessary, convenient or desirable to the performance of its duties and the execution of its powers under this act, including contracts or agreements with qualified financial institutions for the servicing and processing of eligible loans owned by the agency;

    j. To appoint and employ an executive director, who shall be the chief executive officer of the agency, and additional officers, who need not be members of the agency as the agency deems advisable, and to employ architects, engineers, attorneys, accountants, construction and financial experts and other employees and agents as may be necessary in its judgment and to determine their qualifications, terms of office, duties and compensation; and to promote and discharge such officers, employees and agents, all without regard to the provisions of Title 11A, Civil Service, of the New Jersey Statutes;

    k. To contract for and to receive and accept any gifts, grants, loans or contributions from any source, of money, property, labor or other things of value, to be held, used and applied to carry out the purposes of this act subject to the conditions upon which the grants and contributions may be made, including, but not limited to, gifts or grants from any department or agency of the United States or the State for payment of rent supplements to eligible families or for the payment in whole or in part of the interest expense for a housing project or for any other purpose consistent with this act;

    l. To enter into agreements to pay annual sums in lieu of taxes to any political subdivision of the State with respect to any real property owned or operated directly by the agency;

    m. To procure insurance against any loss in connection with its operations, property and other assets (including eligible loans) in the amounts and from the insurers it deems desirable;

    n. To the extent permitted under its contract with the holders of bonds of the agency, to consent to any modification with respect to rate of interest, time and payment of any installment of principal or interest, security or any other terms of any loan to an institutional lender, eligible loan, loan commitment, contract or [8] agreement of any kind to which the agency is a party;

    o. To the extent permitted under its contract with the holders of bonds of the agency, to enter into contracts with any housing sponsor containing provisions enabling the housing sponsor to reduce the rental or carrying charges to persons unable to pay the regular schedule of charges where, by reason of other income or payment from the agency, any department or agency of the United States or the State, these reductions can be made without jeopardizing the economic stability of the housing project;

    p. To make and collect the fees and charges it determines are reasonable;

    q. To the extent permitted under its contract with the holders of bonds of the agency, to invest and reinvest any moneys of the agency not required for immediate use, including proceeds from the sale of any obligations of the agency, in obligations, securities or other investments as the agency deems prudent. All functions, powers and duties relating to the investment or reinvestment of these funds, including the purchase, sale or exchange of any investments or securities may, upon the request of the agency, be exercised and performed by the Director of the Division of Investment in the Department of the Treasury, in accordance with written directions of the agency signed by an authorized officer, without regard to any other law relating to investments by the Director of the Division of Investment;

    r. To provide, contract or arrange for, where, by reason of the financing arrangement, review of the application and proposed construction of a project is required by or in behalf of any department or agency of the United States, consolidated processing of the application or supervision or, in the alternative, to delegate the processing in whole or in part to any such department or agency;

    s. To make eligible loans, and to participate with any department, agency or authority of the United States or of any state thereof, this State, a municipality, or any banking institution, foundation, labor union, insurance company, trustee or fiduciary in an eligible loan, secured by a single participating mortgage, by separate mortgages or by other security agreements, the interest of each having equal priority as to lien in proportion to the amount of the loan so secured, but which need not be equal as to interest rate, time or rate of amortization or otherwise, and to undertake commitments to make such loans;

    t. To assess from time to time the housing needs of any municipality which is experiencing housing shortages as a result of the authorization of casino gaming and to address those needs when planning its programs;

    u. To sell any eligible loan made by the agency or any loan to an institutional lender owned by the agency, at public or private sale, with or without bidding, either singly or in groups, or in shares of loans or shares of groups of loans, issue securities, certificates or other evidence of ownership secured by such loans or groups of loans, sell the same to investors, arrange for the marketing of the same; and to deposit and invest the funds derived from such sales in any manner authorized by this act;

    v. To make commitments to purchase, and to purchase, service and sell, eligible loans, pools of loans or securities based on loans, insured or issued by any department or agency of the United States, and to make loans directly upon the security of any such loan, pools of loans or securities;

    w. To provide such advisory consultation, training and educational services as will assist in the planning, construction, rehabilitation and operation of housing including but not limited to assistance in community development and organization, home management and advisory services for residents and to encourage community organizations and local governments to assist in developing housing;

    x. To encourage research in and demonstration projects to develop new and better techniques and methods for increasing the supply, types and financing of housing and housing projects in the State and to engage in these research and demonstration projects and to receive and accept contributions, grants or aid, from any source, public or private, including but not limited to the United States and the State, for carrying out this purpose;

    y. To provide to housing sponsors, through eligible loans or otherwise, financing, refinancing or financial assistance for fully completed, as well as partially completed, projects which may or may not be occupied, if the projects meet all the requirements of this act, except that, prior to the making of the mortgage loans by the agency, said projects need not have complied with sections 7a.(9) and 42 of this act;

    z. To encourage and stimulate cooperatives and other forms of housing with tenant participation;

    aa. To promote innovative programs for home ownership, including but not limited to lease-purchase programs, employer-sponsored housing programs, such as the mortgage assistance program for law enforcement officers and firefighters established pursuant to P.L. , c. (C. ) (now before the Legislature as this bill), and tenant cooperatives;

    bb. To set aside and designate, out of the funds that are or may become available to it for the purpose of financing housing in this State pursuant to the terms of this act, certain sums or proportions thereof to be used for the financing of housing and home-ownership opportunities, including specifically lease-purchase arrangements, provided by employers to their employees through nonprofit or limited-dividend corporations or associations created by employers for that purpose; and to establish priority in funding, offer bonus fund allocations, and institute other incentives to encourage such employer-sponsored housing and home-ownership opportunities;

    cc. Subject to any agreement with bondholders, to collect, enforce the collection of, and foreclose on any property or collateral securing its eligible loan or loans to institutional lenders and acquire or take possession of such property or collateral and sell the same at public or private sale, with or without bidding, and otherwise deal with such collateral as may be necessary to protect the interests of the agency therein;

    dd. To administer and to enter into agreements to administer programs of the federal government or any other entity which are in furtherance of the purposes of this act;

    ee. To do and perform any acts and things authorized by this act under, through, or by means of its officers, agents or employees or by contract with any person, firm or corporation; and

    ff. To do any acts and things necessary or convenient to carry out the powers expressly granted in this act.

(cf: P.L.1983, c.530, s.5)

 

    7. Section 4 of P.L.1992, c.78 (C.43:16A-16.11) is amended to read as follows:

    4. a. In addition to any loan for which he may be eligible pursuant to the provisions of section 18 of P.L.1964, c.241 (C.43:16A-16.1) and notwithstanding the provisions of that or any other law to the contrary, any member of the Police and Firemen's Retirement System who, at the time of application, is employed by the State or a county, municipality or other political subdivision of the State and who has at least one year of creditable service is, for the purpose of securing for his own occupation as his principal residence a residential property located within this State, eligible to receive a mortgage loan pursuant to the provisions of [this act] P.L.1992, c.78 (C.43:16A-16.9 et seq.) or section 4 of P.L. , c. (C. ) (now pending before the Legislature as this bill). The mortgage loan shall be used only for the purpose of enabling a borrower to acquire or construct a residential property or refinance an existing residential property loan.

    No member shall be eligible hereunder for more than one outstanding mortgage loan at any time, and no member shall be eligible to receive a second mortgage loan on a residential property already mortgaged by him. Preference shall be given in making loans to members who are applying to acquire or construct their first principal place of residence and to members who are qualified applicants pursuant to section 3 of P.L. , c. (C. ) (now pending before the Legislature as this bill).

    b. Any mortgage loan made pursuant to the provisions of [this act] P.L.1992, c.78 (C.43:16A-16.9 et seq.), together with any interest and expenses to the retirement system associated with the making of that loan, shall be repaid in equal installments.

    c. (1) The amount of interest charged with respect to a mortgage loan made pursuant to the provisions of [this act] P.L.1992, c.78 (C.43:16A-16.9 et seq.) shall be fixed for the entire term of the loan. The New Jersey Housing and Mortgage Finance Agency, established under section 4 of P.L.1983, c.530 (C.55:14K-4), shall initially establish the rate within 120 days of the effective date of [this act] P.L.1992, c.78 (C.43:16A-16.9 et seq.), and semiannually reset the rate thereafter. The rate shall be determined by the New Jersey Housing and Mortgage Finance Agency by adding 2% to the index. For the purposes of this subsection, the index shall be the weekly average yield at the time the rate is reset on one-year United States Treasury securities adjusted to a constant maturity as made available by the Federal Reserve Board. The term of any mortgage loan so made shall not exceed 30 years.

    (2) Notwithstanding the interest rates set pursuant to paragraph (1) of this subsection, the State Treasurer, with the advice of the New Jersey Housing and Mortgage Finance Agency, may establish lower rates, as is deemed appropriate, for the purposes of mortgage assistance provided pursuant to section 4 of P.L. , c. (C. ) (now pending before the Legislature as this bill).

    d. No mortgage loan made pursuant to the provisions of [this act] P.L.1992, c.78 (C.43:16A-16.9 et seq.) or section 4 of P.L. , c. (C.          ) (now pending before the Legislature as this bill), shall be sold, transferred or assigned to any person, nor shall the payments with respect to any mortgage loan so made be assumed by any person other than the member to whom that loan was made, except that in the event of the death of a member, the mortgage may be assignable to a surviving spouse if the spouse is the sole heir to the property.

    e. The instrument evidencing a mortgage loan under the provisions of [this act] P.L.1992, c.78 (C.43:16A-16.9 et seq.) or section 4 of P.L. , c. (C. ) (now pending before the Legislature as this bill), may be in such form, and may contain such provisions, not inconsistent with law, as the director may choose to insert for the protection of the retirement system's lien and the preservation of its


interest in the real property mortgaged to it.

(cf: P.L.1992, c.78, s.4)

 

    18. (New section) a. As used in this section:

    "Mortgage loan" means any indebtedness secured by a mortgage on a residential property, which mortgage shall constitute a first lien on the property.

    "Residential property" means any real property including land or, in the case of condominiums, an interest in a lot of land, which real property shall consist of a single one or two family dwelling, including appropriate garages or other outbuildings, or unimproved real property if the proceeds of the mortgage loan shall be used exclusively for the purposes of erecting such a single one or two family dwelling thereon.

    b. The Director of the Division of Investment shall have authority to invest and reinvest the monies in, and to acquire for or on behalf of, the Police and Firemen's Retirement System of New Jersey mortgage loans on residential property.

    c. (1) In addition to any loan for which a member may be eligible pursuant to the provisions of section 18 of P.L.1964, c.241 (C.43:16A-16.1) and after the expiration of P.L.1992, c.78 (C.43:16A-16.9 et seq.), a member of the Police and Firemen's Retirement System for the purpose of securing for his or her occupation as a principal residence a residential property located within this State may receive a mortgage loan pursuant to this section of the "Secure Neighborhood Mortgage Assistance Program," (P.L. ...., c........;C..........)(now pending before the Legislature as this bill). The mortgage loan shall be used only for the purpose of enabling a borrower to acquire or construct a residential property.

    (2) No member shall be eligible hereunder for more than one outstanding mortgage loan at any time, and no member shall be eligible to receive a second mortgage loan on a residential property already mortgaged by him.

    (3) Any mortgage loan made pursuant to the provisions of P.L....., c. ........(C...........)(now pending before the Legislature as this bill), together with any interest and expenses to the retirement system associated with the making of that loan, shall be repaid in equal installments.

    (4) The amount of interest charged with respect to a mortgage loan made pursuant to the provisions of P.L.......,c. (C.........)(now pending before the Legisature as this bill) shall be fixed for the entire term of the loan. The New Jersey Housing and Mortgage Finance Agency, established under section 4 of P.L.1983, c.530 (C.55:14K-4), shall establish the rate and shall semiannually reset the rate. The rate shall be determined by the New Jersey Housing and Mortgage Finance Agency by adding 2% to the index. For the purposes of this subsection, the index shall be the weekly average yield at the time the rate is reset on one-year United States Treasury securities adjusted to a constant maturity as made available by the Federal Reserve Board. The State Treasurer, with the advice of the agency, may establish such lower rates, as is deemed appropriate, for the purposes of the program established by P.L. , c. (C. ) (now pending before the Legislature as this bill). The term of any mortgage loan so made shall not exceed 30 years.

    (5) No mortgage loan made pursuant to the provisions of P.L......, c. ........(C...........)(now pending before the Legislature as this bill) shall be sold, transferred or assigned to any person, nor shall the payments with respect to any mortgage loan so made be assumed by any person other than the member to whom that loan was made, except that in the event of the death of a member, the mortgage may be assignable to a surviving spouse if the spouse is the sole heir to the property.

    (6) The instrument evidencing a mortgage loan may be in such form, and may contain such provisions, not inconsistent with law, as the director may choose to insert for the protection of the retirement system's lien and the preservation of its interest in the real property mortgaged to it.

    d. The agency shall: (1) originate loans; (2) appraise the value of any real property eligible to be mortgaged; (3) guarantee and insure title to the real property; and (4) perform any other service necessary to accomplish the purposes of P.L....., c......(C...........)(now pending before the Legislature as this bill) in a manner consistent with the protection of the rights of beneficiaries of the retirement system. The cost of the performance of these services in connection with the making of a mortgage loan shall be charged to the borrower and included in the amount of that mortgage loan.

    e. The State Treasurer, with the advice of the State Investment Council, the Board of Trustees of the Police and Firemen's Retirement System, and the New Jersey Housing and Mortgage Finance Agency, shall set mortgage loan standards and guidelines for loans made pursuant to P.L......., c........(C...........)(now pending before the Legislature as this bill), including mortgage loan maturity terms, participation fees, mortgage loan insurance requirements, lender compensation rates, servicing fees, loan-to-value ratios, minimum and maximum mortgage loan amounts and eligibility standards consistent with P.L. ...., c. .......(C........)(now pending before the Legislature as this bill).

    f. Any member receiving a mortgage loan shall, within 120 days of the date on which the loan was made, occupy the residence as his principal dwelling place.

    g. Upon application of a member for a mortgage loan the director shall, within 90 days, make available to the New Jersey Housing and Mortgage Finance Agency sufficient funds to provide the mortgage loan, except that no mortgage loan shall be made at any time when the total of all principal balances owing on mortgage loans made pursuant to P.L. ........, c........(C.............)(now pending before the Legislature as this bill) and pursuant to P.L.1992, c.78 (C.43:16A-16.9 et seq.), less all write-offs and reserves with respect to these mortgage loans, together exceeds, or by the making of the loan would exceed, 10% of the total investment assets, including mortgage loans, of the retirement system. Every mortgage loan made hereunder shall be evidenced by a note or bond and shall be secured by a mortgage on the fee of real property located within this State. Every mortgage shall be certified to be a first lien by an attorney-at-law of this State or certified or guaranteed to be a first lien by a corporation authorized to guarantee titles to land in this State. For the purposes of this section, a mortgage shall be deemed to be a first lien, notwithstanding the existence of a lien for current taxes or assessments not due or payable at the time the loan is made, and notwithstanding the existence of leases, building restrictions, easements, encroachments, or covenants which do not materially lessen the value of the real property to be mortgaged.

    h. Pursuant to rules established by the State Treasurer, with the advice of the New Jersey Housing and Mortgage Finance Agency, no mortgage loan shall be made except upon a written certification signed by at least two persons appointed or retained by the appraisers. In the case of a mortgage loan secured by a mortgage upon real property, such certification shall state the opinion of such persons as to the value of the land and the improvements thereon or to be erected thereon and the character of such improvements. Such certification shall be filed with the records of the retirement system and shall be preserved until the retirement system has no interest, as mortgagee or otherwise, in the real property.

    i. No mortgage loan secured by a mortgage on real property shall be made unless the property shall consist of improved real property, or unimproved real property if the proceeds of such loan shall be used for the purposes of erecting improvements thereon.

    j. The State Treasurer shall, with the advice of the State Investment Council, the Director of the Division of Pensions and Benefits and the Executive Director of the New Jersey Housing and Mortgage Finance Agency and in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), promulgate any rules and regulations necessary to accomplish the purposes of P.L. ....., c.....(C...............)(now pending before the Legislature as this bill).1


    1[8.] 9.1 This act shall take effect on the first day of the third month following enactment1, and sections 1 through 5 and sections 7 through 9 shall expire five years after the effective date, provided that any mortgage in effect on the expiration date shall remain in effect until retirement of the mortgage1

 

 

                             

 

Establishes "Secure Neighborhood Mortgage Assistance Program."