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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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.