Gov. Phil Murphy has conditionally vetoed a bill, called the Community Wealth Preservation Program, that sought to keep foreclosed homes in local hands. (Photo by New Jersey Monitor)
Gov. Phil Murphy has conditionally vetoed a foreclosure bill that would have made it easier for families and nonprofits to buy homes at sheriff’s sales, a measure intended to preserve affordable housing and protect low-income neighborhoods from corporate buyers.
Murphy’s veto says he objects to “the legality, practicality, and unintended consequences” of several provisions in the bill, which the Senate passed in June and the Assembly passed in March, in votes split largely along party lines. The conditional veto returns the bill to legislators, who will have to consider the governor’s proposed changes and vote on an amended bill.
Dubbed the “Community Wealth Preservation Program,” the bill would have allowed homeowners in foreclosure or their relatives to buy back their home at a foreclosure sale, reducing the required down payment and giving them more time to come up with the cash.
It also would have allowed nonprofits to buy foreclosed properties to create affordable housing and created incentives for people to buy abandoned homes and live there, instead of investors intent on flipping them for profit.
Murphy wants legislators to remove a provision that would have capped the upset price — the minimum price a property can be sold for at a sheriff’s sale — to 50 percent of whatever is owed on the property.
That provision, as written now, would “force lenders to take large losses on mortgages in default even when the market would enable them to recoup most or all of their investment,” he said. It could also harm borrowers by restricting access to credit and mortgages in New Jersey, because lenders would factor losses into lending decisions, he wrote.
Murphy said other amendments he’s proposing would remove barriers to participation, including by:
- Excusing buyers from living in the home and not selling it for 84 months if they lose a job, relocate for at least six months to care for a sick relative, or experience other such major life changes. The current bill gives owners an out from the residency requirement only in the event of death, disability, divorce, military deployment, or foreclosure.
- Tasking additional entities, such as the county clerk’s office and the registrar of deeds, with enforcing occupancy requirements. The current bill requires the sheriff’s office to solely shoulder such enforcement.
- Allowing nonprofits that have existed at least three years before the foreclosure date to bid on the property at sheriff’s sales. The current bill allows only nonprofits that existed for three years before the bill’s signing to participate.
In his veto, Murphy stressed that he supports the spirit and overall goals of the bill.
“The foreclosure market provides an easy way for investment firms to buy homes in bulk,” he wrote. “I thus wholeheartedly support the overarching objectives of this bill and agree that we must act to limit rapid investor-driven homebuying and provide individuals and families with a fair opportunity to compete for the purchase of homes in foreclosure.”
The governor had until noon Thursday to act on the bill, or it would have automatically become law.
Murphy rarely resorts to conditional vetoes. He has approved 109 bills, conditionally vetoing just nine since the current two-year legislative session started in January.
“These recommended amendments, along with several technical edits, are fully consistent with the bill’s objective of providing prospective owner-occupants, nonprofit community development corporations, and foreclosed-upon defendants and their next of kin a realistic chance at purchasing residential properties in foreclosure auctions,” Murphy wrote in the veto.
Affordable housing advocates have urged the governor to sign the bill since its legislative passage, calling it critically important in a state that has one of the highest foreclosure rates and worst racial wealth gaps in the nation.
Thursday, Staci Berger, who heads the Housing and Community Development Network of New Jersey, said advocates are “disappointed” by the conditional veto.
“The governor does acknowledge that we must protect our state from predatory investors and speculators who are buying up properties, making it harder for our residents to find a home they can afford and contributing to a disparity harming Black and Brown communities,” Berger said in a statement. “We look forward to working together to address the concerns raised in the conditional veto without any further delay so that New Jersey residents and community organizations can protect properties in foreclosure and preserve generational, neighborhood wealth.”
Assemblywoman Britnee Timberlake (D-Essex), a prime sponsor of the bill, couldn’t immediately be reached for comment.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.