Lenders Might Be Billed Per Foreclosure

The said measure is part of the New Jersey Homeownership Preservation Act designed to curb the rising state foreclosure rate brought about by thousands of homeowners defaulting on their subprime mortgages. In addition, the tightening lending guidelines have also made it difficult for distressed homeowners to refinance their mortgage loans.

According to the Housing and Community Development Network of New Jersey, a non profit organization, the $2000 is actually just a small amount compared to their estimated $60,000. The said fee will be placed in a trust fund, which will be used to pay for foreclosure counselors who will mediate negotiations between lenders and borrowers.

For local legislators, such step is important if the state is serious about managing the problems that the foreclosure crisis and the collapse in Wall Street have created.

Aside from the foreclosure fee, the legislation will also include provisions that will give troubled borrowers more time, as much as six months, to negotiate with their lenders so that they could stay in their homes.

If the bill is finally approved and implemented, it will promote responsible lending and will certainly discourage lenders from engaging in aggressive lending practices.

Across the nation, millions of homes are expected to enter foreclosure by the end of the year as home prices continue to decline and home sales remain sluggish. Last October 1, the implementation of the government’s housing rescue program has started. It was designed to provide assistance to about 500,000 distressed homeowners nationwide by allowing them to refinance their existing mortgage to government-backed ones.
By Cassiano Travareli