Reassembling the American Dream

By:  Assemblyman Troy Singleton (D-Burlington)

With the second highest foreclosure inventory in the country (7.2 percent) and the unfortunate distinction of being one of only four states where the foreclosure percentage rose over the past year, we cannot afford to sit idly by in New Jersey while other states continue to rebound from the housing crisis that laid waste to our economy.

Across New Jersey, the communities struggling most to rebound from the housing crisis are those in many southern counties, Burlington among them.  Making matters worse, many of these counties have far higher unemployment rates than the rest of the state.  The call for action has never been more blaring.

The time for praying that the market will heal itself is long gone.  That approach ignores the glaring fact that behind every financially-troubled home is a family struggling to stay afloat.  And these families are part of larger communities struggling to rebound from the Great Recession.  Cumulatively, they comprise the fabric of our state.  As lawmakers, it’s our job to strengthen that fabric, particularly during times of crisis.

To help revive the housing market and keep families in their homes, particularly in our most struggling counties, I recently introduced legislation (A-3915) to create the “Mortgage Assistance Pilot Program” to be run by the New Jersey Housing and Mortgage Finance Agency (HMFA).  Essentially, this three-year pilot program will allow homeowners who are in default of a mortgage owned by the agency, to lower the remaining principal owed on their mortgage if they have negative home equity. 

What this would do is allow 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 at current market rates, if lower than the existing rate. 

In exchange, the homeowner must convey an equity share in the property to the HMFA equal to the percentage of the principal reduction.  This would not have to be paid to the HMFA until the property is eventually resold or over a 10-year period beginning 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 remain qualified 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.

Ultimately, 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, thereby reducing the foreclosures and short sales that are stifling the recovery of the housing sector.

It’s time to work together to help beleaguered families and revive our economy.  We can no longer afford to sit back and hope the market resuscitates itself.  Other states are moving forward and recovering at a far quicker pace than New Jersey. 

In addition to having one of the highest foreclosure rates in the nation, New Jersey has the distinction of registering the second longest foreclosure timeline at 1,002 days, essentially prolonging the dismantling of the American Dream for far too many of our homeowners.

It’s time for us to collectively step up and help families across our state start reassembling that dream.

Assemblyman Troy Singleton is a Democrat representing the 7th legislative district in Burlington  Reassembling the American Dream