The Star-Ledger

Christie Must Move On 'Foreclosure Rescue' Bill

The Star-Ledger — Sunday, August 21, 2011

By Bob Braun / Star-Ledger Columnist

TRENTON — Hunting season is about to reopen in New Jersey. No, not for bears, not for deer. But for the tens of thousands of people in the meat-grinder of home foreclosure. The hunters, the predators, aren't people with guns, but people with stacks of paper who, while promising their prey "rescue," all too often are stealing their homes.

In the last few days of its session, the Legislature — with both rare bipartisan amity and the support of consumer and banking organizations — passed a bill to crack down on so-called "foreclosure rescue" companies and guarantee that people who have lost their homes to them receive fair compensation.

The bill — the Foreclosure Rescue Fraud Prevention Act — landed on Gov. Chris Christie's desk June 29. He hasn't signed it yet.

"But this gets to be very timely right now," says Assemblyman Gary Schaer (D-Passaic), the bill's prime sponsor who has issued a public plea to Christie to sign the legislation.

The timeliness has to do with that reopened hunting season. Last week, a Superior Court judge lifted the suspension on foreclosure activities of four major lenders. They were among six whose operations were halted in December by state Supreme Court Chief Justice Stuart Rabner. Rabner was concerned about reports of "robo-signing" of foreclosure documents. He ordered a special master to review their operations.

The lenders are not the target of Schaer's bill, but the legislator is concerned that the lifting of the suspension will create a deluge of foreclosures and desperate homeowners will be prey again to "rescue" companies, some of which have been indicted by both state and federal prosecutors in New Jersey.

"Foreclosures never really stopped in New Jersey," says Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a nonprofit consumer organization that has provided free mortgage counseling and mediation services to strapped homeowners. "But we are going to be inundated with new cases and the bad guys will take advantage of that — they're going over the lists right now of the people named in foreclosure filings."

She distinguishes between "good guys and bad guys" in the foreclosure rescue industry. The companies promise — for a fee — to help families facing foreclosure, but some — the "bad guys" — end up charging for services they never provide. Worse, they talk the homeowners into selling them their homes for pennies on the dollar — and then flip them for a profit.

Schaer's bill imposes licensing and disclosure requirements on the companies. The firms wouldn't be able to charge fees up-front. And if they persuade the homeowners to sell them their homes, the families facing foreclosure must receive at least 82 percent of the fair market value of the properties.

Schaer said the figure — 82 percent — was used by other states enacting similar bills and is the general benchmark banks use for trying to recoup the value of foreclosed homes.

"If it's good for the banks, it also should be good for the homeowners," Schaer says.

The lawmaker says the bill — which received the endorsement of the New Jersey Bankers Association, the New Jersey Realtors Association and the New Jersey Land Title Association, as well as Citizen Action and New Jersey Legal Services — is aimed at helping "people who are really desperate to save what they can."

"These people have hit rock bottom, not just financially but psychologically as well," says Schaer. "If someone is handing them a piece of paper that tells them they can get out from under, they'll sign it."

Kevin Roberts, a spokesman for Christie, would only say: "As with all pieces of pending legislation, it is receiving the careful review of our counsel's office prior to the governor taking action."

Schaer says his office has had some informal communications with Christie aides who have expressed concerns about the bill.

"It was originally passed four years ago by the Assembly," says Schaer. "It was passed again this session and fully vetted in committee. The state's banking department endorsed it — I don't understand why, at this time, with a crisis facing us, he doesn't act in a timely way."

Top Top | NJCA in the News | NJCA Homepage