Trenton,
NJ – A new state-supported mortgage
foreclosure mediation program is in place
to help the thousands of New Jersey homeowners
facing foreclosure throughout the state,
Gov. Jon S. Corzine, Chief Justice Stuart
Rabner and Attorney General Anne Milgram
announced today.
The program is a joint effort of the Judiciary,
the Office of the Attorney General, the
Housing Mortgage Finance Agency in the Department
of Community Affairs, the Public Advocate,
the Department of Banking and Insurance,
and Legal Services of New Jersey.
The foreclosure mediation program gives
eligible homeowners access to housing counselors,
attorneys and court-trained mediators who
may help homeowners in foreclosure remain
in their homes.
Gov.
Corzine signed legislation in December supporting
the program with $12.5 million in state
funds. The Department of Community Affairs
received $12 million in grant-in-aid funds,
which will be used to train and pay for
housing counselors and lawyers through the
New Jersey Housing and Mortgage Finance
Agency. Housing counselors certified by
both HMFA and the U.S. Department of Housing
and Urban Development are part of the program.
The Judiciary received $500,000 to provide
foreclosure mediator services to homeowners.
"A key to New Jersey's economic recovery
is assuring the stability of families, communities,
and the neighborhood businesses that depend
on them until this national recession subsides,"
Governor Corzine said. "By creating
a mechanism enabling distressed homeowners
and borrowers to work out amicable solutions
during these challenging times, we can stabilize
the entire financial system and keep people
in their homes."
“The
mortgage foreclosure crisis in New Jersey
exacts a devastating toll on homeowners,
their families, their neighborhoods and
communities, which is why the State is committed
to doing everything it can to provide New
Jersey homeowners with the tools to fight
back,’’ Attorney General Milgram
said. “The mortgage foreclosure mediation
program is designed to resolve foreclosure
complaints. The difference between calling
or not calling our hotline could be the
difference between keeping a home or losing
a home.”
“This
program would not be operational without
the hard work and dedication of 700 volunteer
mediators and all those involved in their
training. I would like to thank them along
with the judges and staff who have worked
to coordinate and organize this effort,”
said Chief Justice Rabner.
The
Judiciary is coordinating the start up of
the mediation program in collaboration with
the Office of the Attorney General, the
Housing Mortgage Finance Agency and the
Office of Dispute Settlement (ODS) in the
Public Advocate’s Office.
The
mediation program seeks to resolve foreclosure
actions by proposing work-out and payment
arrangements between distressed borrowers
and lenders. The program refers homeowners
who are facing residential mortgage foreclosure
actions to housing counselors who are certified
by HUD and NJ HMFA and who will recommend
possible mortgage work-out options that
may range from waiving penalties and fees
to modifying loans with lower interest rates.
The
program will provide lawyers to eligible
homeowners. These lawyers will consult with
housing counselors in proposing ways to
resolve mortgage delinquencies. If a homeowner
and lender, through a housing counselor
and/or an attorney, are unable to resolve
the matter out-of-court, the parties will
appear before a neutral court-appointed
mediator. The mediator, in turn, will assist
the lender and borrower in trying to reach
a voluntary and mutual agreement to resolve
the loan delinquency.
Planners
anticipate as many as 16,600 homeowners
will participate in the foreclosure mediation
program this year. It is estimated that
as many as 60,000 homeowners may go through
foreclosure this year.
In
order to be eligible for the free mediation
program, homeowners must not be in bankruptcy,
the property in foreclosure must be the
homeowner’s primary residence, and
it must be a one to three-family residence.
Free housing counselors and lawyers will
be prioritized for those whose foreclosure
complaint was filed on or after January
1, 2008.
Homeowners
will be able to connect with the mediation
program by calling a toll-free hotline,
which is run by Legal Services of New Jersey
(1-888-989-5277). The hotline will be staffed
between 8 a.m. and 6 p.m. Monday through
Friday.
People
answering the hotline will screen callers
for eligibility and when appropriate assign
eligible homeowners to counselors, who will
meet with the homeowner to assess his or
her financial condition and, if possible,
propose a work-out plan. The recommendation
will be forwarded to the lender. Where it
appears the callers have meritorious legal
claims, they will be referred to Legal Services
or other attorneys, as available.
If
the lender and homeowner cannot resolve
the foreclosure complaint out-of-court,
the case will be scheduled for mediation,
at which time the homeowner, counselor,
and lawyer (for income-qualified homeowners)
will work with the mediator and lender to
resolve the mortgage loan default.
The
Judiciary will provide free mediation to
any qualified homeowner whose primary residence
is the subject of a foreclosure action whether
or not they filed an answer disputing the
foreclosure. The homeowner may request foreclosure
mediation up to the time of sheriff’s
sale. As part of this program the Judiciary
provides notice of the program to homeowners,
recruits and trains mediators, and schedules
the mediations.
To
date, the Judiciary has signed up more than
700 mediators to participate in the foreclosure
mediation program. Mediator training has
been conducted by Judiciary staff in conjunction
with the Office of Dispute Settlement in
the Public Advocate’s Office and Legal
Services of New Jersey.
“The
Public Advocate supports the use of mediation
in the public interest to resolve a wide
variety of disputes,” said New Jersey
Public Advocate Ronald K. Chen. “In
this instance, the use of mediation to assist
both homeowners and lenders to work out
a mutually beneficial agreement will not
only benefit the parties involved but also
the public at large. I am pleased that the
Department’s Office of Dispute Settlement
was able to assist the AOC in training more
than 700 mediators as part of this program.”
”Legal
Services is pleased to be able to support
this effort, both by making its statewide
hotline available and by providing legal
representation to many homeowners who have
meritorious claims and defenses,’’
said Melville D. Miller Jr., president and
general counsel of Legal Services of New
Jersey.
HMFA
will fund and train HUD-certified housing
counselors participating in the mediation
program and will monitor their work. Twenty-one
housing counseling agencies responded to
a bid proposal in the fall, including 12
agencies previously approved by HMFA to
provide foreclosure prevention and asset
preservation counseling programs. HMFA will
also award funds for legal representation
to providers. The lawyers will review proposed
workout recommendations, review financial
documents, negotiate with lenders’
attorneys and attend mortgage mediation
sessions.
"Governor
Corzine has made a commitment during these
difficult economic times to assist those
New Jersey residents who are in need,"
said Community Affairs Commissioner Joseph
V. Doria Jr. "This program will help
keep people in their homes and combat the
foreclosure crisis. I want to thank the
Governor, the Attorney General and Marge
Della Vecchia, the head of HMFA, for their
hard work on this issue."
"The
principle purpose of this program is to
provide a forum for mortgage debtors and
financial institutions to explore a resolution
other than foreclosure and keep people in
their homes" said DOBI Commissioner
Steven M. Goldman. "If a modified payment
program is attainable it does not make economic
sense for lenders to foreclose on properties.
Not only do they lose a customer, but the
property often sits empty and contributes
to the decline of a neighborhood. With the
help of this program, everyone benefits.
Consumers avoid foreclosure and stay in
their homes and lenders keep customers and
avoid
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