At a recent hearing on Assembly Bill No. 3119
, which would require a six month forbearance period with foreclosure actions involving “high risk” mortgages when requested by the borrower. The loans affected include sub-prime mortgage loans that exceed the average prime offer rate by 1.5 percent, and others defined in the bill. Numerous advocates, including those from the Citizens Coalition of New Jersey
, alleged that predatory lending and fraud were the causes of New Jersey’s high rate of foreclosures. Their testimony did not differentiate the current marketplace from that which existed prior to the mortgage crisis.
E. Robert Levy, representing the Mortgage Bankers Association of New Jersey (MBA-NJ)
, explained that defaults on mortgage loans were at a low point resulting from the industry’s own corrective action as well as from the Dodd Frank Act and the actions of the Consumer Financial Protection Bureau (CFPB) it created. Mr. Levy explained that the ATR and QM safe harbor provisions (including DTI and Points and fees limits) have resulted in high quality loans with few defaults.
Today, with some lenders looking at non-QM, which would benefit borrowers who would not qualify under QM, Levy urged that the State not be make mortgage lending in New Jersey more costly and difficult by extending the extraordinary time already required to foreclose (A representative from the Judiciary said from first payment default to sheriff’s sale is taking about 1,000 days!). He went on to explain how foreclosures impact the cost of mortgage loans in New Jersey.
Levy then reviewed the provisions of A3119
, which had a number of serious deficiencies, following which one of the bill’s sponsors, Assemblywoman Tucker, and the Committee Chairwoman indicated that they were open to working with the Association in modifying the bill. The bill was voted out of committee with the assurance that MBA-NJ could work on modifications of the bill with the sponsor and committee members. Assemblyman Clifton stated that, based upon Levy’s testimony, he was abstaining.