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State Offers Help for Homeowners with Hard-to-Handle Mortgage Debts

Up to $50,000 in aid may be available to those hit with big interest-rate increases, depressed property values, or economic hardship such as job loss


A new program launched by the state Department of Community Affairs is using $17 million in federal funds to try to prevent mortgage troubles before they start by helping at-risk homeowners bring their monthly payments down to an affordable level.

By many accounts, New Jersey leads the nation when it comes to home-foreclosure rates – as well as mortgages considered to be in “serious delinquency.”

The New Jersey HomeSaver Program, administered through the state Housing and Mortgage Finance Agency, will provide up to $50,000 in financial help to homeowners who meet the program’s qualifications.

Officials estimate the program will be able to help a total of 345 New Jersey households. The goal, according to Department of Community Affairs Commissioner Charles Richman, is to “facilitate long-term mortgage sustainability across the state.”

“We are excited to support yet another foreclosure prevention resource provided by the HMFA to help alleviate the problem of foreclosure in our communities,” Richman said.

Finding long-term mortgage sustainability has been a big struggle for many New Jersey homeowners. The state has consistently had some of the nation’s highest rates of mortgage foreclosures, and economists point to those housing troubles as a major headwind for a state economy that is still struggling to fully recover from the last recession.

Last month, the research firm RealtyTrac found that one in every 584 homes in New Jersey was in foreclosure. Some New Jersey counties -- including Atlantic County, which has been hit hard by the troubles of a sputtering casino industry -- have even higher foreclosure rates, according to RealtyTrac.

Foreclosure problems have also had a big impact on neighborhoods in many of the state’s cities, including Newark.

In all, nearly 5 percent of New Jersey’s homes with a mortgage were in foreclosure, according to May 2015 housing data collected by CoreLogic, another research firm. By comparison, the national foreclosure rate measured by CoreLogic was 1.3 percent in May.

The firm also found that 3.5 percent of all homes with a mortgage in the United States were in “serious delinquency,” while in New Jersey that figure was 8.4 percent.

Economist Joel Naroff wrote in the New Jersey Business and Industry Association’s latest “Naroff Review” that while New Jersey’s 6.1 percent unemployment rate remains higher than the national rate of 5.3 percent, it’s the foreclosure problems that must be resolved to see more normal economic growth.

“The housing market remains the major drag on the economy,” wrote Naroff, who is also president of Naroff Economic Advisors.

“There is a massive overhang of distressed housing that is restraining prices, sales, construction and economic growth,” he wrote.

A key to the state’s new foreclosure-prevention program, the state officials said, is that unlike with other similar initiatives, homeowners don’t have to already be late on their payments to qualify for the assistance. Instead, homeowners can qualify if they are facing unaffordable monthly payments caused by a significant mortgage-rate increase, severe negative home equity, or a job loss or hefty pay reduction that occurred through no fault of their own.

The program also requires that the home be a primary residence in New Jersey; subject to no more than $429,619 to $550,005 in mortgage debt, depending on the number of units; and be the only residential real estate owned by the applicant.

The mortgage assistance provided through the new program will come in the form of a 10-year, no-interest loan. The loan will be non-amortizing, meaning no monthly payments, and eventually forgivable, officials said.

Anthony Marchetta, executive director of the state Housing and Mortgage Finance Agency, predicted New Jersey HomeSaver will “significantly help reduce the likelihood of mortgage delinquency and default in our state and help improve the quality of life of our hardworking residents.”

“We are pleased to administer this program, which expands the Christie administration’s efforts to prevent foreclosure,” he said.

Those who think they qualify for the assistance should contact their mortgage servicer for more information, officials said. Information about the state’s other mortgage-prevention programs is also available online.

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