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December 20, 2024
Hurricane Ida Forbearance Statute
The New Jersey Legislature recently passed a bill providing mortgage payment relief and foreclosure protection to homeowners affected by Hurricane Ida. Under the bill, storm-impacted homeowners may receive a forbearance from making mortgage payments on their primary residence for a period of one year. Homeowners who are already in foreclosure may also obtain a stay of foreclosure proceedings for a period of one-year or through January 1, 2026, whichever date is earlier. To receive a forbearance under the new law, a storm-impacted homeowner must show that they have satisfied all eligibility criteria by receiving a Certification of Eligibility for Forbearance from the New Jersey Department of Community Affairs (DCA).
Under the new law, the DCA must make the online application system publicly available no later than January 28, 2025. A storm-impacted homeowner then has 30 days from the date the online application system becomes publicly available to submit their application for approval. If approved, the DCA issues the homeowner a Certification of Eligibility for Forbearance (CEF) which entitles the homeowner to a one-year period of forbearance from the date the CEF is issued. A homeowner who is already in foreclosure proceedings when they receive a CEF must make an application to the Court to stay the proceedings by April 1, 2025, although the court has discretion to permit a later filing. The homeowner’s receipt of a CEF constitutes good cause for the award of a stay for a period of no more than one year from the date the stay is awarded or January 1, 2026, whichever is earlier.
It is the responsibility of the homeowner to provide a copy of the CEF to their mortgage servicer for the forbearance to be effective. During the forbearance period, the mortgage servicer is prohibited from sending the homeowner a notice of intention to foreclose or otherwise initiating the foreclosure process. One exception to this is if the homeowner’s property is vacant or abandoned. The statute of limitations will be tolled (suspended) during the period of forbearance. All terms of the original mortgage will remain in effect except with regard to default and delinquency. No fees, including attorney’s fees, may be assessed related to the forbearance, late payment, or early repayment during the period of forbearance. The homeowner will be responsible for paying property taxes, insurance obligations, and maintaining the property.
The new law imposes a reporting requirement on mortgage servicers to report all loans for which a CEF has been issued within the State to the Department of Banking and Insurance (DOBI) on a monthly basis, or on any alternative schedule as directed by DOBI. Moreover, if required to do so by the Administrative Director of the Courts, the mortgage servicer must provide the docket numbers, party names, and property addresses as to any pending court actions involving any property granted a forbearance to the Superior Court Clerk’s Office.
Importantly, the new law does not apply to mortgage loans made, insured, or securitized by Fannie Mae, Freddie Mac, the Federal Housing Administration of the United States Department of Housing and Urban Development (HUD), the Department of Veterans Affairs, or the Rural Housing Service. Additionally, the new law does not affect mortgage loans serviced pursuant to the policies of these entities which were not made, insured, or securitized by these entities. The only circumstance in which the Act will apply to a mortgage loan made by these entities is if the loan has been granted a forbearance under the Act prior to being serviced by these entities.
For more info please contact Eric Kelner, Mark Roney or Daniel Kaschak.
