Posts Tagged ‘foreclosure’
Senators Ray Lesniak and Barbara Buono have introduced legislation (S-1566) to transform foreclosed homes into affordable housing. The bill would create the New Jersey Foreclosure Relief Corporation and would allow municipalities to buy foreclosed houses through the state’s $268 million affordable housing trust fund, and thereby earn two-for-one credit toward their affordable housing obligations. If municipalities decide not to buy the vacant homes, the Corporation would be able to purchase them through federal and state financing sources and deed restrict them as affordable housing for three decades. The corporation could also issue bonds to buy and sell vacant foreclosed houses with the goal of selling them at market rates. Assemblyman Jerry Green is expected to introduce the Assembly version of the measure, which Lesniak says will create more than 10,000 new affordable homes: “It does not address the ongoing complex, incomprehensible and so far insolvable obligations of municipalities, but it will make those obligations more readily attainable,” he said. S-1566 was released unanimously by the Senate Economic Growth Committee on Thursday.
The Great Recession has resulted in an inevitable increase in commercial loan defaults (See my post of November 15, 2010, “Lender/Tenant Concerns When a Landlord Defaults on Its Mortgage“). Any lender will tell you that it would rather avoid foreclosure for obvious reasons. Foreclosure is an expensive, lengthy, and sometimes risky process. A deed in lieu of foreclosure may be a viable alternative under the right circumstances, and its use in the commercial real estate market is on the rise (for example Vacant Linens HQ gets new tenant).
Many people are in the dark when it comes to tax sales, including many lawyers. Because municipal governments depend upon real estate taxes and other related assessments as their primary source of revenue, when those taxes remain unpaid for a period of time, the municipality is granted a continuous lien on the land for the delinquent amount, as well as for all subsequent taxes, interest, penalties, and costs of collection. The Tax Sale Law simply provides a stream of revenue for the municipality by encouraging the purchase of tax certificates on tax-dormant properties. New Jersey requires all 566 municipalities to hold at least one tax sale per year provided the municipality has delinquent property taxes and/or municipal charges.