The New Jersey General Assembly passed legislation on Monday that provides homeowners with a six-month hold on foreclosure action while they seek a workout, and requires mortgage holders to maintain foreclosed properties. The legislation also appropriates funds for non-amortizing second lien loans to homeowners. The assistance loans are conditioned on the current lender modifying the existing mortgage to make the payment affordable and aligning the mortgage amount with the property's value. Governor Corzine is expected to sign the bill into law today.
New Jersey joins New York and California in legislative efforts to slow the foreclosure process and encourage workouts, as well as other jurisdictions that are seeking to hold lenders responsible for the condition of foreclosed homes. The restructuring loan program, to my knowledge, is unique, and may offer an interesting model to other states considering their options, while awaiting action at the federal level.