What happens when it expires?


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Thea Gleason juggles jobs to support her family of four in Little Egg Harbor, supplementing her salary as a high school English teacher with a second job in a warehouse.

She’s also usually a waitress, but that gig fell apart when the COVID pandemic hit, slashing her income. So his family asked his lenderfor mortgage abstention. It was granted and allowed them to defer payments for a year, until the end of that month. “So we could buy food instead,” Gleason said.

Gleason, 50, recently received a letter from his mortgage lender saying the company would “work with her” and instruct him to apply for additional mortgage assistance.

Gleason’s understanding is that she can refinance her loan or develop a repayment plan. She hopes they can move the nearly $ 10,000 she owes in deferred payments at the end of her mortgage, instead of increasing the monthly payments or paying them off in one lump sum check, which they don’t. can’t afford, she said.

Thea Gleason stands outside the family home in Little Egg Harbor.  Her family delayed mortgage payments for a year during the pandemic and don't know what her mortgage company will demand of them after the forbearance period ends.

“I don’t have thousands of dollars to pay off something immediately because it’s not like I’ve racked up any savings,” Gleason said. “So it’s scary.”

While New Jersey has put in place temporary protections to keep families who couldn’t make mortgage payments during the pandemic in their homes, the Garden State is grappling with what to do when these grace periods end. finish.

For years after the Great Recession, New Jersey ranked first in the country for the most home foreclosures. How do you prevent this from happening again?

The Legislature is negotiating a bill that would require lenders to allow some homeowners to postpone or reduce their mortgage payments if their incomes were affected by the pandemic, and to tackle missed payments until the end of the loan. mortgage.

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In March, the federal government allocated $ 325 million for New Jersey to set up a “Homeowners Assistance Fund,” but the agency that administers the program, the Housing and Mortgage Finance Agency, is still developing the funds. Guidelines. The agency also managed a small homeowner relief fund whose funding was cut after homeowners struggled to navigate the grant application process.

What is a moratorium on evictions?

New Jersey is currently subject to a foreclosure moratorium, which means homeowners cannot be evicted from their homes for missing mortgage payments until January 1, 2022 – even if their property was sold during a sale by a sheriff or if a final foreclosure judgment has been rendered.

What is tolerance?

Gov. Phil Murphy also announced in March that more than 150 financial institutions have signed up to offer 90-day forbearance to borrowers. The Banking and Insurance Ministry urged banks to postpone missed payments until the loan is over, instead of requiring a lump sum payment at the end of the grace period, but it was not a requirement.

At the federal level, homeowners with a federally guaranteed mortgage can apply for forbearance by the June 30, 2021 deadline.

Nationally, there were 78% fewer data entry requests in the first three months of 2021 compared to the same period in 2020, according to analysis of data from ATTOM Data Solutions and RealtyTrac. And as of May 2021, New Jersey had the fifth highest foreclosure rate in the country, at one in 7,679 properties with a foreclosure filing.

Gleason doesn’t want to join this group.

“It would just be easier for everyone if the amounts you owe were just added at the end of your loan,” Gleason said. “Anything other than that would kill us financially or could lead to foreclosure because we have no way of raising huge sums of money at the moment. I imagine that is the case for most of the people who have benefited from such assistance.

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Will forbearance end?

Under S3669 / A5684, which is making its way into state legislative committees, some homeowners would benefit from mortgage forbearance – even if they are already in the middle of the foreclosure process – if they make a written request and certify that the COVID pandemic caused them. losing their job or salary, or caused an increase in expenses such as childcare or funeral costs.

Any mortgage payments missed during the pandemic would be deferred until the end of the mortgage and not due as a lump sum at the end of the protection period.

“I fear a near avalanche of foreclosures that could happen if we don’t have something firmly in place and codified like this,” said Senator Troy Singleton, D-Burlington, a sponsor.

How does abstention work if this bill passes?

To qualify, a homeowner must earn income below the limit of 150% of the region’s median income, which varies by county. The owner must also have less than six months of the 2019 household family income in their bank accounts.

A landlord can request a suspension or reduction of mortgage payments for his principal residence or a building in which he lives and which rents a maximum of four units.

The current bill wording includes a forbearance period of at least six months, but a homeowner can request an additional nine months, for a total of 15 months of protection.

Housing advocates welcomed the bill but also introduced changes to strengthen the legislation.

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Almost seven years ago, Jody Stewart – along with other storm survivors Sandy – founded the New Jersey Organizing Project to help secure housing assistance for those whose homes were destroyed by the storm.

“I lost everything I owned in 40 inches of water and struggled to get paid by insurance companies and to work with the government for grants,” said Stewart, 63. “So I’m fighting for forbearance and rental aid for the people of Sandy, some who are still not up a decade later, inform our advocacy now.”

Stewart and other housing groups are pushing for a two-year forbearance period, raising the income limit to qualify and ensuring that all banks and mortgage lenders are required to offer the protections.

“We found out during Sandy that many non-state banks tried to fight forbearance because they said it was state law, not federal law,” Stewart said. .

“I simply have no recourse”

Advocates are also pushing to extend forbearance relief to small landlords who rent a few units but do not live in the building.

As of mid-March 2020, no tenant can be evicted from their home, even if they don’t pay their rent, so landlords across the state are losing tens of thousands of dollars with little recourse. Murphy recently signed a bill extending the moratorium on evictions until January 1, 2022.

The New Jersey Apartment Association, which represents homeowners, said mortgage forbearance would not be necessary if New Jersey ended the moratorium on evictions.

“Put in place a moratorium that restricts or eliminates rent income for landlords, then tell them not to worry because they can defer their mortgage payments for months, only to pay interest on that money for decades.” , is not good public policy. Said David Brogan, executive director of the NJAA. “While we appreciate the intent of the bill, it does not address the problem the government created when it put in place a moratorium on indefinite evictions.”

Melissa Arcaro Burns got more than a year for forbearance on the mortgage on her family home in Haddonfield, which she rents to tenants. This allowed him to delay nearly $ 18,000 in mortgage payments.

But her tenants were sporadically paying the monthly rent of $ 2,300 even before the pandemic, she said. In landlord-tenant court records, she lists $ 13,800 in unpaid rent from December 2019 through May 2020, and Arcaro Burns said tenants did not pay her in the months that followed.

Her property’s bank account is now empty, she said, as she had to continue paying around $ 13,000 in property tax, insurance, water and sewer payments, but didn’t had no rental income to cover them.

“If I don’t pay my taxes, I risk the township coming after me, placing a lien on my house, and selling that lien and losing the house,” said Arcaro Burns, 45. “This house has been in my family since the 1970s, and belonged to my grandparents until they sold it to us. My first child was born in this house and I considered passing it on to the one of my children, I am very attached to this house.

She looked at grants for small owners, but the state program was only available to owners of three to 30 units, not with a single property like her.

In a planning document, the New Jersey Housing and Mortgage Finance Agency presents a proposal on how to start spending $ 326 million in federal funds subject to Treasury Department approval – launch a $ 10 million pilot program dollars and offer up to $ 35,000 to some homeowners to help pay mortgage principal and interest, property taxes and home insurance. But this application is not yet operational.

Arcaro Burns and his tenants are in talks, trying to agree on a repayment plan. The tenants declined to comment.

“I just have no recourse,” Arcaro Burns said. “Once our account was totally depleted and I really felt like I had done everything right, I really felt like I had nowhere to go.”

Ashley Balcerzak is a reporter at the New Jersey Statehouse. For unlimited access to his work spanning the New Jersey legislature and political power structure, please subscribe or activate your digital account today.

Email: [email protected]

Twitter: @abalcerzak



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