Legislative Briefing: Wealth Preservation Act New Jersey No. 5664
JOSHUA MILLER
8, October 2024
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. If CDCs decline, individual buyers interested in taking advantage of the reduced terms may bid on condition they live in the property for at least seven years. After that, investor buyers or other purchasers not seeking discounted terms from the Program may purchase the property as they always have. By creating tiers of access to foreclosed properties, the new legislative scheme injects equitable neighborhood interests into a process that historically accounted for a chronic wealth losses in low-income and Black communities by favoring non-resident investors.[2]
In this legislative brief, CLiME analyzes the law, detailing its purposes and explaining how each provision aims to maintain homeownership within the hands of homeowners, residents, or community organizations. The analysis will cover the bill’s provisions, their intended impact, and the broader implications for housing equity and stability.
Continue reading the legislative briefing in its entirety below:
Legislative Briefing: Wealth Preservation Act New Jersey No. 5664
[1] Ruchi Gupta, "U.S. Foreclosure Rate by Year, State and City (2024)," FinMasters, January 5, 2024, https://finmasters.com/foreclosure-rate/.
[2] Casey Bond, "Foreclosure Rates in the U.S.," The Balance, January 23, 2023, https://www.thebalancemoney.com/foreclosure-rates-in-the-u-s-7097770.