Bill headed to Murphy would help low-income bidders buy foreclosed homes in NJ more easily

Ashley Balcerzak

30 June, 2022

New Jersey may make it easier for family members, lower income bidders and community nonprofits to purchase foreclosed homes under a bill sent to Gov. Phil Murphy on Wednesday reworking the sheriff's sale process to prioritize these buyers and discourage large investors from flipping those properties.

Under the “Community Wealth Preservation Program," New Jerseyans who have experienced foreclosure or their next of kin would get the first shot when the property goes up for auction, or the right of first refusal at the bid price. 

And if a distressed homeowner can’t secure financing, they or a family member can request that a community development group buy the property and the nonprofit would have the second right of refusal, or second shot, at the bid price.  If a housing nonprofit wins the bid on a foreclosed property, it would be required to restore and sell the house to a low-income family making no more than 120% of the county’s median income, or else rent the home to a family making below 100% of the county’s median income.

"It's really to keep the wealth in the community, to empower residents through homeownership and not just serve as low hanging fruit to outside investors who are trying to come in and capture these properties for pennies on the dollar," said Assemblywoman Britnee Timberlake, D-Essex, who sponsored the bill.

New Jersey consistently tops rankings of states with the highest foreclosure rates in the country. Data from May 2022 shows that one out of every 2,346 housing units were in foreclosure in the Garden State, the most behind only Illinois, according to a report from ATTOM, which analyzes nationwide real estate data.

In the wake of the 2008 housing crisis, investors began rapidly buying up residential properties in foreclosure across the country, often in majority Black counties, according to a recent report by the House Financial Services Committee. A Rutgers study found almost half of residential sales in Newark went to institutional investor buyers, which contributed to "rapidly rising rents, decreased homeownership, higher barriers to affordable housing production goals, renter displacement and less stable communities," according to report by authors David Troutt and Katharine Nelson.

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Bill headed to Murphy would help low-income bidders buy foreclosed homes in NJ more easily