Committee Statement to Assembly, No. 793 (1R) — Community Wealth Preservation Program, New Jersey (2022)

Summary

This is the Assembly Commerce and Economic Development Committee Statement to the First Reprint of Assembly, No. 793, with committee amendments, State of New Jersey, dated March 14, 2022. The committee reports favorably Assembly Bill No. 793 (1R), designated as the "Community Wealth Preservation Program," which would revise sheriff's procedures for the sale of residential foreclosure properties. The bill reduces the deposit required at a sheriff's sale of residential property from 20 percent to 3.5 percent under certain circumstances. A bidder who finances the purchase and does not use the property as a primary residence would face a fine of up to $100,000 for the first violation and $500,000 for each violation thereafter. The committee amended the bill to cap the upset price at 50 percent of the outstanding mortgage and accumulated costs.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                           STATEMENT TO

                          [First Reprint]
                       ASSEMBLY, No. 793
                          with committee amendments



       STATE OF NEW JERSEY
                            DATED: MARCH 14, 2022

          The Assembly Commerce and Economic Development Committee
      reports favorably Assembly Bill No. 793 (1R).
          As amended, this bill, designated as the “Community Wealth
      Preservation Program,” would revise sheriff’s procedures for the sale
      of residential foreclosure properties. The bill reduces the deposit
      required at the time of a sheriff’s sale for residential property from 20
      percent to 3.5 percent, under certain circumstances. Current law
      provides that all bidders on properties for sale at sheriff’s sales are
      required to deposit 20 percent of the purchase price of the property.
          Under the bill, in the case of residential property in which the
      bidder will occupy the property for at least 84 months, the bidder will
      have up to 90 business days to complete the sale, with no interest
      accruing on the balance of the sale for 60 business days following the
      sale. If the successful bidder does not pay the balance within this 90
      business day period, the bidder would forfeit the deposit on the
      property and be responsible for the payment of accrued interest and
      fees or penalties incurred as a result of the sale being void, unless the
      failure to fulfill the balance is due to the bidder’s inability to close a
      mortgage through no fault of the bidder’s own.
          The bill provides that the sheriff require the foreclosing plaintiff to
      disclose whether the property is vacant, tenant-occupied, or owner-
      occupied.
          Under the bill, a bidder may purchase property in a sheriff’s sale
      by way of financing if the bidder provides documentation that the
      bidder has been pre-approved by a financial institution for financing
      the property. A bidder, other than the foreclosed upon defendant or the
      foreclosed upon defendant’s next of kin, may only use the financing
      option if the property will be the bidder’s primary residence. If a
      successful bidder finances the property and does not use the property
      as a primary residence, the bidder will be subject to a fine of up to
      $100,000 for the first violation and $500,000 for each violation
      thereafter. However, there are exceptions to the penalties if the bidder
      must vacate the property due to death of the bidder or the bidder’s
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spouse, disability of the bidder or the bidder’s spouse, divorce,
military deployment, or foreclosure.
    To be a successful bidder on a residential property the bidder, who
is not the plaintiff, who intends to occupy the property and finance the
purchase of the property, shall have received eight hours of homebuyer
education and counseling from the United States Department of
Housing and Urban Development (HUD), and shall present
certification of completion of that training at the time of purchase.
    The bill requires each sheriff’s office to maintain information,
written in plain language, regarding the program to finance the
purchase of residential property in a foreclosure sale on its internet
website in a manner that is accessible to the public. Additionally, each
sheriff’s office is to display information, written in plain language,
regarding the program in its office in a manner that is conspicuous to
the public. The information posted on a sheriff’s website or displayed
in a sheriff’s office concerning the program must contain language
notifying the public that the program excludes those purchasing
property for investment purposes.
    For any county in which the primary language of 10 percent or
more of the residents is a language other than English, the bill directs
the sheriff’s office to provide the information required for the program
in that other language or languages in addition to English. The
alternate language would be determined based on information from the
latest federal decennial census.
    With the exception of sales conducted pursuant to the Community
Wealth Preservation Program, the bill increases the fee to be charged
by virtue of an execution sale from 4 to 5 percent, or 6 percent to 10
percent, depending on whether the sum involved is greater than or less
than $5,000, respectively. The bill also increases the minimum fee to
be charged by virtue of an execution sale from $50 to $150.
    Finally, the bill provides creditors and creditors’ agents with
immunity from liability for damages to certain vacant and abandoned
property so long as reasonable care is exercised, and clarifies that
bidders are not authorized to enter the property prior to the time of
sale.

COMMITTEE AMENDMENTS:
    The committee amended the bill to:
    (1) require that the upset price for the sale of the foreclosed upon
property be no higher than 50 percent of the sum of the outstanding
mortgage and any interest, fees, or other costs accumulated from the
beginning of the foreclosure action;
    (2) define the term “upset price” to mean the minimum amount
that a foreclosed upon property will be sold for in a sheriff’s sale;
    (3) lower the minimum fee to be charged for a sale by virtue of
execution from $750 to $150;
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    (4) permit the sheriff’s office to collect a flat fee of six percent on
any sale by virtue of an execution;
    (5) make the bill take effect 90 days from the date of enactment
rather than immediately upon enactment; and
    (6) make certain technical changes.


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