SENATE, No. 2340

STATE OF NEW JERSEY

219th LEGISLATURE

 

INTRODUCED APRIL 9, 2020

 


 

Sponsored by:

Senator  TROY SINGLETON

District 7 (Burlington)

Senator  STEVEN V. OROHO

District 24 (Morris, Sussex and Warren)

Senator  LINDA R. GREENSTEIN

District 14 (Mercer and Middlesex)

 

Co-Sponsored by:

Senators Turner, Addiego, Cardinale, Pennacchio and Thompson

 

 

 

 

SYNOPSIS

     Authorizes Governor to permit mortgage forbearance and rent payment responsibility reduction for certain emergency-impacted residential property owners and tenants during emergency circumstances.

 

CURRENT VERSION OF TEXT

     As introduced.

 


An Act concerning protections for residential property owners and tenants during emergency circumstances and supplementing Title 52 of the Revised Statutes.

 

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

 

     1.    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 mortgage forbearance. 

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

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

     (2)   An emergency-impacted homeowner may apply on forms to be provided by the department for a certification of eligibility for a mortgage forbearance.  The application shall be submitted in accordance with a deadline to be established by a mortgage forbearance executive order.  The reviewing entity shall approve or deny an application within 30 days of its delivery.  An emergency-impacted homeowner shall be eligible for a mortgage forbearance regardless of whether the residential property is already the subject of a foreclosure proceeding prior to the effective date of a mortgage forbearance executive order. 

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

     (b)   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, shall continue without modification, and there shall be no fees assessed for the forbearance, or penalty for early repayment.

     (c)   A mortgage forbearance executive order may designate a foreclosure action filed by a bank as an unlawful practice, pursuant

to the New Jersey consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.), if the action is filed 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. 

     (4)   (a)   An emergency-impacted homeowner who applies for a forbearance on a property as its landlord shall 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.  A mortgage forbearance executive order may direct that, when applying for a 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 a 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)   A mortgage forbearance executive order may designate that a landlord has engaged in an unlawful practice, pursuant to the New Jersey consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.), if, while in receipt of a forbearance, the landlord willfully refuses to provide an emergency-impacted tenant with an emergency rent reduction period.

     (5)   An emergency-impacted tenant whose landlord has been provided with a forbearance may apply to the landlord for an emergency rent reduction period, unless directed by a mortgage forbearance executive order to apply to an alternative administrative agent.  A mortgage forbearance executive order shall establish whether other forms of financial relief obtained by the landlord, in addition to a 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 a mortgage forbearance executive order.  A 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 a mortgage forbearance executive order.

     (6)   A mortgage forbearance executive order may provide the following protections to residential tenants regardless of whether the tenant’s landlord has obtained a forbearance:

     (a)   A mortgage forbearance executive order may provide that eviction proceedings shall not be initiated or continued during the time provided in the executive order, unless the court determines on its own motion or motion of the parties that a proceeding is necessary in the interest of justice; and

     (b)   A mortgage forbearance executive order may prohibit landlords from imposing late fees on residential tenants.

     (c)   A mortgage forbearance executive order may establish a 90-day repayment window 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 established pursuant to subsection a. of this section. 

     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 forbearance program;

     (b)   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.

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

     (d)   notify the courts of the individuals and associated residential properties that are eligible for a forbearance; and

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

     (2)   Upon knowledge of a homeowner's eligibility for a forbearance, the bank shall notify the homeowner and the courts.

     (3)   Upon approval of a forbearance application pursuant to subsection c. of this section, the reviewing entity shall notify the applicant, the bank, and the courts.

     e.     Emergency-impacted homeowners awarded a forbearance under this section shall be responsible for the maintenance of the property during the period of forbearance.  After service of notice of any proceedings conducted to terminate forbearance, made on the homeowner at an address determined pursuant to due diligence of the movant bank to be the actual current residence of the homeowner, providing opportunity for the homeowner to respond and contest the proceedings, a forbearance awarded under this section shall cease immediately upon a court's determination that the subject residential property has been abandoned by the homeowner. 

     f.     Nothing in this section shall be construed as limiting the ability of a bank and residential property owner to participate in a mediation sponsored by the Administrative Office of the Courts in accordance with the requirements of the mediation program.  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.    A 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.  A 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 a 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 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 a 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 (5) of subsection c. of this section.

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

     “Mortgage forbearance executive order” means an executive order issued pursuant to subsection a. of 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.

     “Reviewing entity” means the entity designated in a mortgage forbearance executive order, pursuant to paragraph (1) of subsection c. of this section, with reviewing mortgage forbearance applications submitted by emergency-impacted homeowners.  A 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 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 may adjust and supplement the provisions of a mortgage forbearance executive order, as long as those adjustments and additions do not conflict with this section. 

 

     2.    This act shall take effect immediately.

 

 

STATEMENT

 

     This bill allows the Governor to permit 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.

     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 a 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. 

     The forbearance period of an emergency-impacted homeowner would conclude no later than 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 a 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 mortgage forbearance executive order to apply to an alternative administrative agent.  The mortgage forbearance executive order would establish whether other forms of financial relief obtained by the landlord, in addition to a mortgage 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 mortgage forbearance executive order.  The 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,” that may have been issued by the Governor. 

     Under the bill, a 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 or continued during the time provided in the executive order, unless the court determines on its own motion or motion of the parties that a proceeding is necessary in the interest of justice;

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

·        A 90-day repayment window 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 established pursuant to subsection a. of this section. 

     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 courts of the individuals and associated residential properties that are eligible for a forbearance; and

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

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

     The bill provides that a mortgage forbearance executive order may designate a foreclosure action filed by a bank as an unlawful practice, pursuant to the New Jersey consumer fraud act, if the action is filed only as a result of not receiving mortgage payments from an emergency-impacted homeowner during the time period of a forbearance.  The bill also provides that the executive order may designate that a landlord has engaged in an unlawful practice under the New Jersey consumer fraud act if, while in receipt of a forbearance, the landlord willfully refuses to provide an emergency-impacted tenant with an emergency rent reduction period.

     Emergency-impacted homeowners awarded a forbearance under this bill would be responsible for the maintenance of the property during the period of forbearance.  After service of notice of any proceedings conducted to terminate forbearance, made on the homeowner at an address determined pursuant to due diligence of the creditor to be the actual current residence of the homeowner, providing opportunity for the homeowner to respond and contest the proceedings a forbearance awarded under the bill would cease immediately upon a court's determination that the subject residential property has been abandoned by the emergency-impacted homeowner. 

     Nothing in this bill would limit the ability of parties to a foreclosure action to participate in a mediation sponsored by the Administrative Office of the Courts in accordance with the requirements of the mediation program.  Nothing in this bill would 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 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 commissioner’s 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.