Lawmakers advance bill to help families stay in homes despite foreclosures

New Jersey lawmakers advanced legislation last week that’s intended to both help families facing foreclosure hold onto their homes and create more affordable housing.

Dubbed the “Community Wealth Preservation Program,” the bill would allow homeowners in foreclosure or their relatives to buy back their home at a foreclosure sale, help nonprofits buy foreclosed properties to create affordable housing, and create incentives for people to buy abandoned homes and live there, instead of investors intent on flipping them for profit.

The measure comes as foreclosures rise nationally. New Jersey has the highest foreclosure rate in the nation. One in every 2,510 homes has a foreclosure filing, according to the real estate data company Attom.

Assemblywoman Britnee Timberlake (D-Essex), a prime sponsor, said foreclosures are most common in urban areas and disproportionately impact residents of color.

“Black and brown wealth is hemorrhaging through the loss of foreclosed property, and the people who live in the community often do not have deep enough pockets to even participate in the foreclosure process. This bill is a creative opportunity for families to save their wealth at the time of a foreclosure sale,” Timberlake said.

When the bill came up for a vote Thursday before the full Assembly, Assemblywoman Beth Sawyer (R-Gloucester) warned that one provision could have the unintended effect of driving up foreclosures. Sawyer is a longtime real estate agent and broker.

To make foreclosed properties more affordable to people who would live there instead of investors looking to flip them, the bill would cut the required deposit from 20% to 3.5% and give buyers an extra two months to pay what they owe, so long as they agree to live in the home for seven years. Violators face fines that could top $500,000.

“Think what just happened over the last two years — people lost their lives, they lost their jobs, people moved away,” Sawyer said, referring to the recession sparked by the pandemic. “This is going to basically hold these people hostage to their home for seven years. If they can’t make the payments, what happens? We have another foreclosure crisis.”

Sawyer urged lawmakers to amend the bill to lower the residency requirement or otherwise tweak it to account for unseen economic volatility that could threaten homebuyers’ stability.

But Timberlake said the legislation offers outs for buyers who endure unexpected death, disability, divorce, military deployment, or other circumstances during the seven-year residency requirement.

Assembly members went ahead and passed the bill in a 46-30 vote split largely along party lines. Sen. Nia Gill (D-Essex) sponsored the Senate version of the bill, which is now before the Senate Community and Urban Affairs Committee.