On January 12, 2024, Governor Phil Murphy signed the Wealth Preservation Program law, an ambitious reorganization of the foreclosure process in favor of second chances, non-profit rights of second refusal and affordable home ownership. Then-Assemblywoman, now-Senator Britnee Timberlake, introduced this law because New Jersey has the highest foreclosure rate in the country, with one foreclosure for every 2,271 homes.[1] The potential impact of this law goes beyond just reducing the number of foreclosures. It potentially limits institutional investors’ opportunities to purchase foreclosed homes at sheriff’s sales by providing ordinary homebuyers initial opportunities to bid on properties on more favorable terms. Under the Act, defaulting homeowners, their next of kin or tenants have the first chance to re-purchase their homes from sheriff sales at a publicly disclosed discount price by paying only a 3.5% down payment with 90 days to close. If they do not elect to purchase, non-profit community development corporations (CDCs) have the next right of refusal in exchange for deed restrictions that keep the property affordable to subsequent owners or renters.
Read MoreOn July 10, 2024, Governor Phil Murphy signed a tax sale revision law (A3772/S-2334), which modifies the process for investors engaged in tax sale foreclosures and provides steps for homeowners to protect their equity. Senator Brian Stack (D-33) introduced this law in January 2024 in part because of the case of a 94-year-old Black woman named Geraldine Tyler, who lost her home and equity in the tax sale foreclosure process. In 1999, Mrs. Tyler purchased a one-bedroom condominium in Minneapolis, Minnesota. She lived in the condominium until 2010 when problems in the neighborhood prompted her to rent an apartment in a safer area. She experienced financial difficulties, leading her to get $2,300 in tax arrears, which increased to $15,000 with penalties and interest. In 2015, Hennepin County, Minnesota, seized her condominium, sold it for $40,000, and pocketed $25,000 in surplus equity. On May 25, 2023, the United States Supreme Court unanimously held in Tyler v. Hennepin County that the municipality violated the Takings Clause of the U.S. Constitution when they stripped and retained Mrs. Tyler’s equity.
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