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New Jersey Lawmaker Seeks Six-Month Foreclosure Reprieve for Homeowners

New Jersey state senator and Newark city councilman Ron Rice recently introduced legislation that would grant "underwater" homeowners a six-month grace period to organize their finances before initiating a foreclosure, according to NJSpotlight.com.

Described as a temporary fix to extreme circumstances, the bill's passage could deliver a win-win situation to all involved. "I'm doing this to help homeowners and communities, but also to help the financial institutions so they don't take losses of the amounts they're facing," said Rice.

The bill comes on the heels of a recent announcement of a $26 billion national settlement between the states and five major lenders - Ally Financial (the former GMAC), Bank of America, Citibank, JP Morgan Chase and Wells Fargo - regarding allegations of mortgage abuses. New Jersey is expected to receive about $837 million from the settlement for mortgage relief.

Under the terms of the proposal, delinquent New Jersey homeowners would have six months to complete loan modifications through the Foreclosure Mediation Program before entering foreclosure proceedings. The program would sunset in three years, when bank payouts under the national settlement end.

Several lenders halted foreclosures in New Jersey in the fall of 2010 after reports surfaced of "robo-signing" - a practice in which lenders signed legal documents without proper verification in an attempt to speed homeowner evictions. In 2011, foreclosures dropped 80 percent as lenders and officials worked to end those abuses and return eviction proceedings to proper scrutiny.

Today, New Jersey has an estimated backlog of 50,000 to 100,000 foreclosures. Among the homes sold in New Jersey last year, one in every 10 was in foreclosure.

Bankruptcy proceedings may also bring mortgage foreclosures to a halt. If you are considering filing for bankruptcy, an experienced bankruptcy attorney may be able to explain the options best for you.

Source: NJSpotlight, "Proposed Bill Offers Six-Month Grace Period for Underwater Mortgages," Joe Tyrrell

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