Legislation sponsored by Assembly Democrats
"Behind every financially-troubled home is a family working feverishly to stay afloat," said Singleton (D-
The bill (A-955) would establish the "Mortgage Assistance Pilot Program" in the
The sponsors noted that
"We have the second highest foreclosure inventory in the country, and according to some experts, we might be on our way to taking the lead," said Green (D-
"The goal of this pilot program is to help homeowners afford to stay in their homes while discouraging distressed homeowners, who are still current on their mortgages, from defaulting," said DeAngelo (D-
"It's time to work together to help distressed families and revive our economy," said Sumter (D-
"In addition to having one of the highest foreclosure rates in the nation,
The bill would help ease the state's housing crisis by allowing someone whose property value has plummeted below what they owe on their mortgage to have their principal lowered to an amount more reflective of current market realities. If approved, the remaining principal owed on the mortgage could be reduced by as much as 30 percent, and the interest rate could be reset to lower existing rates.
In exchange, the homeowner must convey an equity share in the property to the HMFA equal to the percentage of the principal reduction. That would not have to be paid until the property is eventually resold or over a 10-year period starting after the restructured mortgage is paid off. A homeowner who qualifies for the pilot program would be required to remain the owner of the property for at least five years in order to qualify for the benefits. However, if a homeowner sells the property in less than five years, an additional five percent of the sales price would be forfeited to the HMFA.
The agreements under the pilot program would only be available for a period of three years after the date of enactment to allow these agreements to be studied for efficacy.
Properties subject to a lien or a government tax exemption may be subject to certain restrictions.
The bill was released by the
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