On September 15, 2008, the Governor of New Jersey enacted the “Save New Jersey Homes Act of 2008,” a law designed to protect homeowners threatened by foreclosure in the wake of the subprime mortgage crisis. As discussed in our previous post, Proposed New Jersey Act to Protect Against Foreclosure Passes Both Houses, the new law allows for eligible borrowers to continue to pay introductory rates on their mortgages for a period of three years before facing an interest rate reset. These homeowners are still required to ultimately pay off the interest deferred during the extension period. However, the law provides them with a reasonable period of time to continue to make payments on their mortgages; hopefully avoiding foreclosure while searching for an alternative housing solution. The law also requires financial institutions to provide qualified homeowners with written notice of an impending interest rate reset both 60 and 30 days prior to the expiration of the introductory rate.
The law should provide some much-needed relief to homeowners in New Jersey. The State has been documented as having one of the highest foreclosure rates in the nation, particularly during the past year.
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