Working Families

A955

This bill establishes the "Mortgage Assistance Pilot Program" in the New Jersey Housing and Mortgage Finance Agency (“NJ HMFA”) for a period of three years to allow certain homeowners, who have negative home equity and who are in default on an agency owned mortgage, to lower their principal balances by transferring shares of equity in the mortgaged property to the agency.

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A955


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  • commented 2015-05-28 15:24:27 -0400
    The primary purpose to buying a home is to build future financial security through the home’s equity. Without equity you are a tenant. If I understand this bill correctly, if the property value only increases by the same percentage of the balance reduction (or less) when the home is sold, there will be no profit for the homeowner as it will all go to HMFA to repay the loan, meaning they were only a renter. Additionally, if the house is paid off in full, the homeowner may still owe money to HMFA for the reduction of the mortgage even if the value of the property never rises, meaning you are now a renter who still owes money to your landlord for the next 10 years.

    This pilot seems to benefit everyone but the homeowner who, if the property values do not rise well over the percentage of the reduction, will not only be responsible for all of the maintenance, taxes, and insurances that accompany ownership, but will never see their way clear. Why would anyone agree to do this? Financially a person in this situation would be better off doing a short sale or simply defaulting. They can recoup their losses, rebuild their credit and purchase a new home at its current value within 3 years (1 year for certain FHA programs) and not have to share (or risk) equity with anyone or end up in debt for another 10 years to HMFA.