LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 3670

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: OCTOBER 21, 2024

 

 

SUMMARY

 

Synopsis:

Provides for mortgage payment relief and foreclosure protection for certain homeowners impacted by remnants of Hurricane Ida.

Type of Impact:

Time-limited delay in State revenue collections time-limited State expenditure increase.

Agencies Affected:

Housing and Mortgage Finance Agency; State entities holding mortgage loans; Department of Banking and Insurance; Department of Community Affairs; the Judiciary.

 

 

Office of Legislative Services Estimate

Fiscal Impact

FY 2025 – FY 2026 

Potential State Revenue Shift

Indeterminate

Potential State Expenditure Impact

Indeterminate

 

 

·         The Office of Legislative Services (OLS) anticipates that the one-year mortgage forbearance granted to certain homeowners under the bill will result in a time-limited delay in State revenue collections made by the Housing and Mortgage Finance Agency and any other State entities holding mortgage loans.

·         The OLS cannot determine the number of homeowners with mortgages through State agencies who will request and be eligible for the mortgage forbearance, for how many months they will suspend payment, or the amount of the mortgage payments typically owed.  Therefore, the timing and amount of the delayed revenues are indeterminate.

·         The OLS determines that there may be an indeterminate State expenditure increase as a result of administrative responsibilities assigned to the Department of Community Affairs, which include developing an online application process, reviewing applications, awarding Certifications of Eligibility for Forbearance, and conducting hearings concerning certificates terminated by the commissioner.

·         The OLS finds there may also be a State expenditure increase associated with the bill’s requirement that the Department of Banking and Insurance investigate certain complaints made by storm-impacted homeowners who were denied a forbearance and maintain certain records.

·         The OLS finds that there may also be an indeterminate fiscal impact on the Judiciary related to potential costs incurred and costs avoided associated with stays in foreclosure proceedings allowed pursuant to the bill.

 

BILL DESCRIPTION

 

      This bill would offer certain homeowners impacted by the remnants of Hurricane Ida temporary protections against foreclosure, and would require mortgage servicers to provide a temporary pause in the mortgage payment obligations of a storm-impacted homeowners, as defined in the bill.

      The bill permits eligible homeowners, meeting the requirements set forth in the bill, to apply to the Department of Community Affairs for Certifications of Eligibility for Forbearance online through a system established by the department no later than 30 days after the date the application becomes publicly available.  The department would be required to review each application, as specified in the bill, to determine whether the applicant meets eligibility criteria demonstrating their need for assistance, and if they do, issue a Certification of Eligibility for Forbearance to the applicant, which would entitle the applicant to receive a one-year mortgage forbearance from their mortgage servicer.  Any homeowner who is denied a Certification of Eligibility for Forbearance would be permitted to appeal that decision, and any homeowner who obtains a Certification of Eligibility for Forbearance but is denied a forbearance from a mortgage servicer licensed by the Department of Banking and Insurance would be permitted to file a complaint with that agency, which would be required to investigate, and if appropriate, order the mortgage servicer to grant a forbearance.

      The bill requires that, during forbearance, and during the subsequent time period constituting an extension of the mortgage, all terms and conditions of the original mortgage, except with regard to default and delinquency during forbearance, are to continue without modification, fees assessed, late penalties, or penalties for early repayment.  The bill also requires a mortgage servicer to: (1) submit certain information, as specified in the bill, related to any pending actions involving property granted a forbearance to the Superior Court Clerk’s Office; and (2) submit certain information on all forbearances that the mortgage servicer has provided within the State to the Department of Banking and Insurance on a monthly basis, except as provided in the bill.

      Further, a storm-impacted homeowner who is the subject of a foreclosure proceeding would be awarded, by the court and upon application by the property owner for good cause shown, a stay in the foreclosure proceedings.  An application to the court by a storm-impacted homeowner would be required to be made prior to the first day of the sixth month following the effective date of the bill, unless the courts in their discretion permit application submission for a longer period.  The award of a stay pursuant to the bill would conclude upon the earlier of: the conclusion of one year following the initial award of a stay of foreclosure proceedings; or January 1, 2026.


 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS anticipates that the one-year mortgage forbearance granted to certain homeowners under the bill will result in a time-limited delay in State revenue collections made by the Housing and Mortgage Finance Agency and any other State entities holding mortgage loans.  The OLS cannot determine the number of homeowners with mortgages through State agencies who will request and be eligible for the mortgage forbearance, for how many months they will suspend payment, or the amount of the mortgage payments typically owed.  Therefore, the timing and amount of the delayed revenues are indeterminate.

      The OLS determines that there may be an indeterminate State expenditure increase as a result of administrative responsibilities assigned to the Department of Community Affairs, which include developing an online application process, reviewing applications, awarding Certifications of Eligibility for Forbearance, and conducting hearings concerning certificates terminated by the commissioner.  The OLS finds that there may also be a State expenditure increase associated with the bill’s requirement that the Department of Banking and Insurance investigate certain complaints made by storm-impacted homeowners who were denied a forbearance and maintain certain records.  The OLS finds that there may also be an indeterminate fiscal impact on the Judiciary related to potential costs incurred and costs avoided associated with stays in foreclosure proceedings allowed pursuant to the bill.

 

Section:

Local Government

Analyst:

Grace Ahlin

Assistant Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).