EAGLE FORUM of New Jersey

Carolee Adams, STATE PRESIDENT

Stop The New Jersey Residential Foreclosure Transformation Act!

Assembly Bill A.2168/Senate Bill S.1566

Low-income subsidized housing in every New Jersey neighborhood

Largest expansion of State Government in our history
Already passed 2 State Committees

See Immediate Actions Below!

This legislation will allow a property owner’s tax dollars subsidize the next owner
of that home – as low income subsidized housing - after the property owner has
been evicted via foreclosure. This could effectively devalue every neighborhood in
New Jersey. The New Jersey Builders Association, New Jersey Realtors
Association, and the New Jersey Mortgage Brokers Association all have a vested
interest: the builders with construction, and the realtors and mortgage brokers with
full commissions (subsidized by tax dollars) on every low income subsidized
transaction that occurs.

In effect, this legislation would be one of the largest expansions of State

Government in our history, bringing government into every neighborhood in New
Jersey while making them our largest landlord and property owner. There are over
600 homes in foreclosure in Bergen County alone! One question posed by New
Jersey taxpayer and Tea Party leader, Bill Eames: “Are you comfortable thinking
that the NJ Foreclosure Relief Corporation may purchase the house next door,
across the street or up the block? What happens to our local tax base?” Consider
the abuses and negative repercussions: the market increases yet a community is
stuck with low-income housing; the State cannot take care of the property;
corruption.

In ConservativeNewJersey.com, a commenter stated this law

violates the NJ Constitution: Art VIII section 3 para 2-3:
2. No county, city, borough, town, township or village shall hereafter give any
money or property, or loan its money or credit, to or in aid of any individual,
association or corporation, or become security for, or be directly or indirectly the
owner of, any stock or bonds of any association or corporation.

3. No donation of land or appropriation of money shall be made by the State or any

county or municipal corporation to or for the use of any society, association or
corporation whatever.

Immediate Actions:

With an “indeterminate fiscal impact on State and local government",* (see

explanation from the Office of Legislative Services below):

(A) plan to attend a probable May hearing when the Assembly

Appropriations Committee meets in Trenton. Then, like Rob Eichmann,
GOP State Committeeman from Gloucester County, who opposed this Bill in
past testimony and provided much of the aforementioned info, you can do
that, too;

(B) share with your local Mayor and Council via e-mail and at their next,
televised public meeting (advising them to consult with their borough
attorney and the League of Municipalities), as well as your County
Freeholders and State legislators to see what actions they will undertake to
stop this dangerous, over-reaching legislation. (The legislation was
proposed by Democrats and passed the Assembly Housing and Local
Government Committee and the Senate Economic Growth Committee with
Democratic votes);

C) Circulate this information with New Jersey family, friends, local media
and Letters to the Editor;

D) Last, certainly
Governor Christie should veto this
legislation with your encouragement. His number:
609.292.6000.
http://www.njleg.state.nj.us/2012/Bills/S2000/1566_E1.HTM

Office of Legislative Services Estimate

Fiscal
Impact Year 1 Year 2 Year 3
State Fiscal
Indeterminate Fiscal Impact – See Comments Below
Impact
Local Fiscal
Indeterminate Fiscal Impact – See Comments Below
Impact

 The Office of Legislative Services (OLS) concludes that the

enactment of Senate Bill No. 1566 (1R) of 2012 will have an
indeterminate fiscal impact on the State and certain local
governments.

 The bill may result in a shift of State revenues from the New
Jersey Affordable Housing Trust Fund to the Foreclosure to
Affordable Housing Transformation Fund held by the New Jersey
Housing and Mortgage Finance Agency (NJHMFA), by providing
that up to $10 million of additional realty transfer fee collections in
excess of $75 million be deposited in the latter.

 The NJHMFA may experience an increase in expenditures

associated with the operations of the New Jersey Foreclosure Relief
Corporation, and production of affordable housing. These additional
expenditures may be offset by increased resources from State
appropriations, transfers from municipal affordable housing trust
funds, or other sources.
  This legislation authorizes the NJHMFA to issue bonds to fund
certain activities of the corporation and to contract with the
corporation with respect to sources of repayment of, and security for,
any such bonds.

 The bill permits the transfer of municipal affordable housing trust fund
monies that would otherwise spent by those municipalities for general affordable
housing purposes or transferred to the New Jersey Affordable Housing Trust
Fund, for the purchase of foreclosed properties and mortgage assets that would be
sold or leased as affordable housing.

 The OLS notes that municipalities are not required to commit any current or
future resources to support the purposes of the bill. To the extent funds are transferred
that would have been shifted to the State, the New Jersey Affordable Housing Trust
Fund will lose revenue it would otherwise have received.

http://www.njleg.state.nj.us/2012/Bills/A2500/2168_S1.HTM

STATEMENT TO

ASSEMBLY, No. 2168

with committee amendments

STATE OF NEW JERSEY

DATED: MARCH 5, 2012

The Assembly Housing and Local Government Committee reports favorably and with
committee amendments Assembly Bill No. 2168.

This bill, the "New Jersey Residential Foreclosure Transformation Act," establishes the
"New Jersey Foreclosure Relief Corporation," which will be dedicated to the purpose of
purchasing foreclosed residential properties from institutional lenders and dedicating them for
occupancy as affordable housing. Although the Legislature has adopted various measures over
the past few years that have helped families who were unable to afford to pay their home
mortgages to stay in their homes, current economic realities are forcing many families to default
on their mortgages. It has been reported that more than 100,000 New Jersey homeowners are
dealing with foreclosures.

The residential mortgage foreclosure crisis results in numerous problems for families, for
communities, for businesses, and for government. Families that have lost their homes through
foreclosure need a place to live despite limited financial ability. Foreclosures are concentrated in
certain, usually disadvantaged, neighborhoods. When numerous properties in a neighborhood
remain vacant for a prolonged period, there is a heightened risk of the neighborhood becoming
blighted. A vast number of foreclosed residential properties are owned by banks and other
lenders. Maintaining this excessive inventory of deteriorating homes inhibits the ability of
lenders and developers to take action to reinvigorate the economy. All of these factors
exacerbate the difficulties governments face in trying to continue to provide vital services to the
public.

Despite these formidable problems, the current economic climate presents our State with a
unique opportunity. This bill will take advantage of the glut of vacant foreclosed residential
properties and historically low interest rates in order to address one of the most intractable
problems New Jersey faces, the creation and preservation of housing for individuals and families
of limited means.

The bill would establish the "Foreclosure Relief Corporation" as a temporary entity within
the New Jersey Housing and Mortgage Finance Agency (HMFA). The corporation would be
governed by a seven-member board, consisting of the Commissioner of Community Affairs, the
Executive Director of the New Jersey Housing and Mortgage Finance Agency, the
Commissioner of Banking and Insurance, and the State Treasurer, ex officio, and three New
Jersey residents, appointed by the Governor, who have knowledge in the areas of real estate,
housing design, construction, or operation; mortgage banking, finance, and foreclosure; or
community development. The Senate President and the Speaker of the General Assembly would
each nominate one member for appointment by the Governor.

The corporation would make an annual report of its activities to the Governor and to the
Legislature, setting forth a complete operating and financial statement covering its operations,
transactions, and holdings during the year. The corporation's books and accounts would be
audited at least once in each year by certified public accountants.

The corporation would cease its operations on December 31, 2017. On that date, any assets,
properties, or funds held by the corporation would transfer to the HMFA.

The bill empowers the corporation to purchase foreclosed residential property and mortgage
assets from institutional lenders in order to produce affordable housing and dedicate it as such
for 30 years. The bill directs the corporation to enter into contracts or loans, or both, with no
more than two experienced, financially sophisticated, community development financial
institutions to enhance the ability of the corporation to fulfill its purpose of producing affordable
housing.
 The corporation or, if applicable, one of its contractors, would give the municipality in which
the property is located a right of first refusal to purchase the property and dedicate it as
affordable housing. A municipality may exercise its right to purchase and dedicate eligible
property for affordable housing, decline the option to purchase, or decline to exercise the option
but, instead, authorize the corporation or its contractors to use monies from the municipality's
affordable housing trust fund to purchase the property.

Whenever a municipality does not exercise its right of first refusal to purchase a property, the
corporation may purchase the property and convey it for occupancy as affordable housing
subject to a 30-year deed restriction to another public agency, a community development
corporation, a developer, or a qualifying household.

Whenever the corporation, its contractors or a municipality purchases an eligible property

from monies deposited in a municipality's affordable housing trust fund, the municipality would
receive bonus credits toward any constitutionally-imposed obligation to provide affordable
housing as follows: two units of credit for each eligible property sold or conveyed as a for-sale
unit or leased as rental housing; two units of credit for each unit of affordable housing dedicated
for permanent supportive housing, other than supportive shared living housing; and one and one-
quarter units of credit for each new bedroom dedicated in supportive shared living housing. The
bill awards municipalities additional units of credit, above the actual number of dedicated
affordable housing units produced, as an incentive for municipalities to authorize the use of their
affordable housing trust fund monies for the purchase of eligible properties and to dedicate them
as affordable housing.

The amendments to the bill further provide that the number of additional units of credit that a
municipality can receive towards its affordable housing obligation for property purchased and
dedicated as affordable housing under the bill cannot exceed 25 percent of the municipality's
affordable housing obligation. The amendments also specify that a municipality cannot receive
additional units of credit for producing a unit of affordable housing under this bill and additional
units of credit for that unit under another provision of law.

The bill establishes a mechanism through which a "foreclosure-impacted municipality," one

that has 10 or more foreclosed homes listed on a multiple listing service for at least 60 days, can
insulate its affordable housing trust funds from the laws that will require the transfer of its trust
fund monies to the "New Jersey Affordable Housing Trust Fund." A foreclosure-impacted
municipality can accomplish this by adopting a resolution committing the expenditure of its
municipal affordable housing trust fund monies for the purchase of foreclosed properties from
the corporation and pledging, and transferring, at least $150,000 of its municipal trust fund
monies to the corporation for the corporation to use to produce affordable housing.

The corporation could use funds transferred from a foreclosure-impacted municipality for
any purpose authorized under this bill but, as amended, must produce affordable housing within
the foreclosure-impacted municipality. If the corporation is unable to use all of the transferred
funds within two years of the date of transfer, the corporation would return the remaining funds
to the municipality and the municipality would have at least six months from the date the funds
are returned to commit the funds in accordance with other provisions of law. During this time
period, all municipal trust fund monies designated for the purchase of foreclosed properties
would be protected from transfer to the State. A municipality would receive bonus credits, as
otherwise provided in the bill, for affordable housing produced by the corporation or by one of
its contractors pursuant to this mechanism.

The bill would allow the corporation to establish criteria to identify the circumstances when
the purchase, sale, lease, or conveyance of market-rate units furthers the purposes of the
corporation. The corporation itself, or through its contractors, would be able to purchase, sell,
lease, or convey market-rate units in accordance with those criteria without imposing
affordability controls upon the property as long as the transaction does not violate the terms of
any other provision of law or requirement.

The bill establishes the "Foreclosure to Affordable Housing Transformation Fund," a

nonlapsing, revolving fund to serve as the repository for funds appropriated or otherwise made
available for the corporation to fulfill its purposes. The HMFA would administer the fund and
would be authorized to transfer into the fund any amounts it has that may be used for the
production of affordable housing. The bill authorizes HMFA to issue bonds to fund the activities
of the corporation. The bill calls for prioritization of the allocation of tax-exempt private activity
bonds in order to allow the corporation to fulfill the purposes of the bill.

Under the bill, in any year in which the proceeds from the Realty Transfer Fee additional fee,
paid pursuant to paragraph (2) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7),
exceeds $75 million, the first $10 million above the $75 million collected will be transferred into
the "Foreclosure to Affordable Housing Transformation Fund” for the purposes of the production
of affordable housing. The bill authorizes the Commissioner of Community Affairs to transfer
into the fund certain amounts held for the production of affordable housing, including but not
limited to monies deposited in the "New Jersey Affordable Housing Trust Fund."

The bill provides that amounts deposited in the fund that are derived from federal funding
sources or are otherwise dedicated to the production of affordable housing must be used for the
production of affordable housing. However, the bill allows the corporation to use other funds for
the production of affordable housing or market-rate housing and allows the corporation to use
annually up to three percent of fund monies for administrative cost.

Finally, the bill would establish an expedited foreclosure procedure for uncontested actions
to enforce residential mortgage liens against vacant and abandoned real property. The bill sets
forth standards for determining when property is vacant and abandoned, including presumptions
to be used to determine whether property being occupied by tenants has been abandoned. If a
residential mortgage lender’s action to foreclose a mortgage on abandoned real property is
uncontested, the lender would be able to file a Motion for Expedited Judgment and Sale and a
declaration that the debtor has abandoned the real property, supported by affidavit. Upon a
finding that the motion and affidavit are satisfactory, the Superior Court would enter final
judgment in foreclosure and direct issuance of a writ of execution for the sale of the property to
be held within 45 days after entry of final judgment.
COMMITTEE AMENDMENTS

The committee amendments would amend:

 Section 3 to define “individuals with special needs” to mean individuals with mental
illness, physical or developmental disabilities, victims of domestic violence, ex-offenders,
youth aging out of foster care, disabled and homeless veterans, individuals and households
who are homeless, individuals with AIDS/HIV, and individuals in other emerging special
needs groups identified by State agencies. If not part of a household, individuals shall be at
least 18 years of age. This definition is consistent with the definition contained in the New
Jersey affordable housing regulations, N.J.A.C. 5:97-1.4;

 Section 3 in order to modify the definition of "permanent supportive housing" to

make it consistent with the definition contained in the New Jersey affordable housing
regulations, N.J.A.C. 5:97-1.4;

 Section 4 to provide that at least one of the three members appointed to the seven-
member governing board of the New Jersey Foreclosure Relief Corporation would have a
New Jersey real estate license;

 Section 6 to require the corporation and the HMFA to enter into an agreement for the
purposes of determining the target amount of bond proceeds to be raised by the HMFA for
the activities of the corporation, as well as the sources of repayment of, and security for, the
agency's bonds;

 Section 7 to clarify that the corporation or its contractors would be able to apply
monies deposited in a municipality's affordable housing trust fund towards the purchase
price of a property if the municipality adopts a resolution authorizing the corporation or its
contractors to use its trust fund monies for that purpose;

 Section 8 to clarify that a municipality would receive credit for the purchase and
dedication of a foreclosed property as affordable housing whenever the property is purchase
from monies deposited in the municipality's affordable housing trust fund, regardless of
whether the active participant is the municipality or the corporation, or one of its
contractors;

 Section 8 to provide that the number of additional units of credit beyond the actual
number of units of housing provided under this bill may not exceed 25% of whatever the
municipality's affordable housing obligation may be, and that no unit or bedroom shall
receive the additional units of credit described in the bill in addition to any other type of
additional units of credit that may be available towards a municipality's affordable housing
obligation;

 Section 8 to clarify that each unit of affordable housing dedicated for permanent
supportive housing, other than supportive shared living housing, would be entitled to a 2 for
1 credit. As used in this context, "unit of affordable housing" means a single living unit,
 such as an apartment, which contains, at a minimum, a bedroom with a bathroom and
cooking facilities. This amendment clarifies the distinction between a "unit of affordable
housing" and a "bedroom" in "supportive shared living housing," such as a group home, in
which individuals reside in a bedroom and have access to shared living space, such as
bathrooms and kitchens;

 Section 10 to require the corporation or its contractors to use funds transferred

pursuant to subsection b. of section 10 of the bill to produce very-low, low-, and moderate-
income housing within the municipality transferring funds pursuant to this section; and

 Section 11 to authorize the HMFA to issue bonds to fund the activities of the corporation
and specify that issuance of tax-exempt bonds must be consistent with the corporation allocation
for tax-exempt private activity bonds.

http://www.njleg.state.nj.us/2012/Bills/S2000/1566_S2.HTM

SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 1566

with committee amendments

STATE OF NEW JERSEY

DATED: MARCH 8, 2012

The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 1566
(1R), with committee amendments.

As amended, this bill, the "New Jersey Residential Foreclosure Transformation Act,"
establishes the "New Jersey Foreclosure Relief Corporation" as a temporary entity within the
New Jersey Housing and Mortgage Finance Agency (HMFA) for the purpose of purchasing
foreclosed residential properties from institutional lenders and dedicating them for occupancy as
affordable housing. The corporation would cease its operations on December 31, 2017. On that
date, any assets, properties, or funds held by the corporation would transfer to the HMFA.
 As established, the corporation would be governed by a seven-member board, consisting of
the Commissioner of Community Affairs, the Executive Director of the New Jersey Housing and
Mortgage Finance Agency, the Commissioner of Banking and Insurance, and the State
Treasurer, ex officio, and three New Jersey residents, appointed by the Governor, who have
knowledge in the areas of real estate, housing design, construction, or operation; mortgage
banking, finance, and foreclosure; or community development. The Senate President and the
Speaker of the General Assembly would each nominate one member for appointment by the
Governor.

The corporation would make an annual report of its activities to the Governor and to the
Legislature, setting forth a complete operating and financial statement covering its operations,
transactions, and holdings during the year. The corporation's books and accounts would be
audited at least once in each year by certified public accountants.

The bill empowers the corporation to purchase foreclosed residential property and mortgage
assets from institutional lenders in order to produce affordable housing and dedicate it as such
for 30 years. The bill directs the corporation to enter into contracts or loans, or both, with no
more than two experienced, financially sophisticated, community development financial
institutions to enhance the ability of the corporation to fulfill its purpose of producing affordable
housing.

The corporation or, if applicable, one of its contractors, would give the municipality in which
the property is located a right of first refusal to purchase the property and dedicate it as
affordable housing. A municipality may exercise its right to purchase and dedicate eligible
property for affordable housing, decline the option to purchase, or decline to exercise the option
but, instead, authorize the corporation or its contractors to use monies from the municipality's
affordable housing trust fund to purchase the property.

Whenever a municipality does not exercise its right of first refusal to purchase a property, the
corporation may purchase the property and convey it for occupancy as affordable housing
subject to a 30-year deed restriction to another public agency, a community development
corporation, a developer, or a qualifying household.

Whenever the corporation, its contractors or a municipality purchases an eligible property

from monies deposited in a municipality's affordable housing trust fund, the municipality would
receive bonus credits toward any constitutionally-imposed obligation to provide affordable
housing as follows: two units of credit for each eligible property sold or conveyed as a for-sale
unit or leased as rental housing; two units of credit for each unit of affordable housing dedicated
for permanent supportive housing, other than supportive shared living housing; and one and one-
quarter units of credit for each new bedroom dedicated in supportive shared living housing. The
bill awards municipalities additional units of credit, above the actual number of dedicated
affordable housing units produced, as an incentive for municipalities to authorize the use of their
affordable housing trust fund monies for the purchase of eligible properties and to dedicate them
as affordable housing.
 As amended, the bill further provides that the number of additional units of credit that a
municipality can receive towards its affordable housing obligation for property purchased and
dedicated as affordable housing under the bill cannot exceed 25 percent of the municipality's
affordable housing obligation. The amendments also specify that a municipality cannot receive
both additional units of credit for producing a unit of affordable housing under this bill, and
additional units of credit for that unit under another provision of law.

The bill establishes a mechanism through which a "foreclosure-impacted municipality," one

that has 10 or more foreclosed homes listed on a multiple listing service for at least 60 days, can
insulate its affordable housing trust funds from the laws that will require the transfer of its trust
fund monies to the "New Jersey Affordable Housing Trust Fund." As amended, a foreclosure-
impacted municipality can accomplish this by adopting a resolution committing the expenditure
of its municipal affordable housing trust fund monies for the production of affordable housing
and authorizing the transfer of at least $150,000 of its municipal affordable housing trust fund
monies to the corporation for the corporation to use to produce affordable housing.

As amended, the corporation must use funds transferred from a foreclosure-impacted

municipality to produce affordable housing within that municipality. If the corporation is unable
to use all of the transferred funds within two years of the date of transfer, the corporation would
return the remaining funds to the municipality and the municipality would have at least six
months from the date the funds are returned to commit the funds in accordance with other
provisions of law. During this time period, all municipal trust fund monies designated for the
purchase of foreclosed properties would be protected from transfer to the State. A municipality
would receive bonus credits, as otherwise provided in the bill, for affordable housing produced
by the corporation or by one of its contractors pursuant to this mechanism.

The bill would allow the corporation to establish criteria to identify the circumstances when
the purchase, sale, lease, or conveyance of market-rate units furthers the purposes of the
corporation. The corporation itself, or through its contractors, would be able to purchase, sell,
lease, or convey market-rate units in accordance with those criteria without imposing
affordability controls upon the property as long as the transaction does not violate the terms of
any other provision of law or requirement.

The bill establishes the "Foreclosure to Affordable Housing Transformation Fund," a

nonlapsing, revolving fund to serve as the repository for funds appropriated or otherwise made
available for the corporation to fulfill its purposes. The HMFA would administer the fund and
would be authorized to transfer into the fund any amounts it has that may be used for the
production of affordable housing. The bill authorizes HMFA to issue bonds to fund the activities
of the corporation. The bill calls for prioritization of the allocation of tax-exempt private activity
bonds in order to allow the corporation to fulfill the purposes of the bill.

Under the bill, in any year in which the proceeds from the Realty Transfer Fee additional fee,
paid pursuant to paragraph (2) of subsection a. of section 3 of P.L.1968, c.49 (C.46:15-7),
exceeds $75 million, the first $10 million above the $75 million collected will be transferred into
the "Foreclosure to Affordable Housing Transformation Fund” for the purposes of the production
of affordable housing. The bill authorizes the Commissioner of Community Affairs to transfer
into the fund certain amounts held for the production of affordable housing, including but not
limited to monies deposited in the "New Jersey Affordable Housing Trust Fund."

The bill provides that amounts deposited in the fund that are derived from federal funding
sources or are otherwise dedicated to the production of affordable housing must be used for the
production of affordable housing. However, the bill allows the corporation to use other funds for
the production of affordable housing or market-rate housing and allows the corporation to use
annually up to three percent of fund monies for administrative cost.

Finally, the bill, as amended, would authorize lenders to bring summary actions to foreclose
mortgages on vacant and abandoned residential property. In order to secure entry of a
foreclosure judgment, the lender would have to follow procedures in addition to those set out in
the "Fair Foreclosure Act" and the Rules of Court. The court may enter a final residential
mortgage foreclosure judgment under the bill, as amended if it finds, by clear and convincing
evidence, that the residential property is vacant and abandoned and that a review of the pleadings
and documents filed with the court supports the entry of a final judgment. The bill precludes a
court from entering a final residential mortgage foreclosure judgment if the court finds that the
property is not vacant or abandoned, or the mortgagor or any other defendant has filed an
answer, appearance or other written objection asserting defenses or objections that preclude the
court from entering final judgment. The bill states that this new summary action is not intended
to supersede or limit other procedures adopted by the Court to resolve residential mortgage
foreclosure actions, including, but not limited to, foreclosure mediation. The bill provides that it
should not be construed to affect the rights of a tenant to possession of a leasehold interest under
the Anti-Eviction Act, P.L.1974, c.49 (C.2A:18-61.1 et seq.), the "New Jersey Foreclosure
Fairness Act," P.L.2009, c.296 (C.2A:50-69 et seq.), or any other applicable law

COMMITTEE AMENDMENTS:

Committee amendments to the bill:

 Define, for the purposes of the bill, “individuals with special needs” to mean
individuals with mental illness, physical or developmental disabilities, victims of domestic
violence, ex-offenders, youth aging out of foster care, disabled and homeless veterans,
individuals and households who are homeless, individuals with AIDS/HIV, and individuals
in other emerging special needs groups identified by State agencies. If not part of a
household, individuals shall be at least 18 years of age. This definition is consistent with
the definition contained in the New Jersey affordable housing regulations, N.J.A.C.5:97-1.4;

 Provide that in determining a municipality’s affordable housing obligation, no unit or

bedroom shall receive the additional units of credit described in the bill in addition to any
other type of additional units of credit that may be available;
  Require the corporation or its contractors to use funds transferred to the New Jersey
Affordable Housing Trust fund to produce affordable housing in the municipality that
transferred those funds; and

 Replace a provision to establish an expedited foreclosure procedure for uncontested

actions to enforce residential mortgage liens against vacant and abandoned real property
with a provision authorizing summary actions to foreclose mortgages on vacant and
abandoned residential property.

FISCAL IMPACT:

The Office of Legislative Services (OLS) concludes that enactment of this bill would have an
indeterminate impact on the State, HMFA, and local governments. The State may collect an
indeterminate amount of new revenues associated with the filing of motions to proceed
summarily because a property is vacant and abandoned. The HMFA may experience an increase
in expenditures, offset in part by the transfer of municipal affordable housing trust fund
proceeds, related to the operations of the New Jersey Foreclosure Relief Corporation and the
production of affordable housing. The enactment of this bill may result in redirection of monies
that could be used for general affordable housing purposes towards the purchase of foreclosed
properties that would be either sold or leased as affordable housing.

This legislation permits the HMFA to issue bonds, the proceeds of which would support the
activities of the corporation. The bill requires the corporation and the HMFA, within 120 days
after this enactment of the bill, to enter into a mutually binding funding agreement that, in part,
would determine that amount of bond proceeds to be raised by the HMFA for the activities of the
corporation, as well as the sources of repayment and security for the principal and interest on the
debt.

The OLS is unable to estimate the amount of realty transfer fee revenues that will be
transferred into the Foreclosure to Affordable Housing Transformation Fund. The realty transfer
fee is sensitive to economic conditions and the slowdown in the real estate market caused by the
national recession resulted in a decline in State collections of the additional fee segment of the
realty transfer fee from $109.3 million in Fiscal Year 2006 to $40.8 million in Fiscal Year 2011.
According to information provided to the OLS by the Department of the Treasury, the additional
fee generated an average of $43.3 million in revenues in Fiscal Years 2009, 2010, 2011. As of
November 2011, the additional fee has generated $18.6 million in revenues. At this rate, the
State will collect $44.7 million in additional fee revenues in Fiscal Year 2012. Because the slow
economic recovery and weakness in the real estate market will continue to affect revenues
generated by the additional fee, it could be several years before collections once again exceed the
$75 million threshold, permitting transfers into the Foreclosure to Affordable Housing
Transformation Fund.

The OLS cannot determine the amount of municipal affordable housing trust fund monies
that will be made available to support the purposes of the bill. This legislation is permissive with
regard to the use of municipal affordable housing trust fund resources for the purchase of eligible
properties and affordable housing production. Currently, 295 municipalities are authorized to
maintain affordable housing trust funds. According to the information reported by municipalities
to the Department of Community Affairs (DCA), through February 3, 2012, the Statewide
balance of these trust funds is $268.2 million. This information does not indicate the amount of
funds already reserved for either existing affordable housing construction and rehabilitation
projects and programs, or for affordability assistance. Municipalities are also permitted to
expend not more than 20 percent of the revenues collected from development fees for
administrative purposes.

Paragraph d. of N.J.S.A.52:27D-329.2 requires all affordable housing development fees to be

committed for expenditure within four years from the date of collection. Paragraph b. of
N.J.S.A.52:27D-329.3 requires municipalities to commit to expend collections from payments-
in-lieu of construction of affordable units at a residential development site within four years from
the date of collection. The DCA has clarified that N.J.S.A.52:27D-329.2(d) and 52:27D-
329.3(b) require that all unspent affordable housing trust fund balances as of July 17, 2008 (the
effective date of P.L.2008, c.46) must be committed for expenditure within four years from the
date of collection. The remaining balances may be subject to the forfeiture provisions of the
aforementioned statutes if the municipality fails to commit to expend by July 17, 2012.
According to information reported to the DCA, Statewide municipal affordable housing trust
balances as of July 17, 2008 totaled $257.9 million. Of this amount, $81.1 million has been
spent, while $183.7 million must be expended by July 17, 2012.

However, the bill permits “foreclosure-impacted municipalities” to commit the expenditure

of its municipal affordable housing trust fund monies for the production of very-low income,
low-income, and moderate-income housing, through the adoption of a resolution authorizing the
transfer of at least $150,000 of its municipal trust fund monies to the corporation for the
production of affordable housing. If a foreclosure-impacted municipality adopts such a
resolution, its affordable housing trust fund will be exempted from the requirement to transfer
certain balances to the New Jersey Affordable Housing Trust Fund. Data available through DCA
indicate that 130 municipalities have at least $150,000 in affordable housing monies available to
be spent by July 17, 2012. If all 130 municipalities are “foreclosure-impacted” and dedicate the
required minimum of $150,000 to the corporation, provided that these balances are not already
needed for another legally authorized purpose, $19.5 million will be made available to the
corporation for affordable housing production.