Understanding Affordable Housing Foreclosure in New Jersey
The NJ Supreme Court has ruled that all municipalities must allow the development of affordable housing (also called low income housing). For this housing, there is a limit for the amount of a mortgage that can be placed against the property. However, in many instances, the mortgage company lends money without realizing there is a limit. The NJ Supreme Court has also ruled that a lender may not foreclosure on an amount that exceeds the affordable housing limits. In those instances, it is possible to obtain a principle reduction loan modification.
When is an Affordable Housing Foreclosure Complaint Illegal?
Affordable housing in New Jersey has specific limits on the amount of a mortgage that can legally be placed against the property. If you reside in an affordable housing unit, your deed will clearly state the following information:
- That your home is designated as affordable housing.
- The calculated resale price of your home.
- That you may not place a mortgage as a lien against the property in an amount greater than the calculated resale price.
Unfortunately, sometimes a mortgage lender will offer to refinance your mortgage or give you a second mortgage (such as a credit line, equity loan, or HELOC) based on the current market value of the property, without checking to see if it is designated as affordable housing. This mortgage will be greater than the legal mortgage limit on the property, and they will attempt to foreclose if you cannot stay current on the payments. This is against the law.
Sometimes this is done by mistake due to an oversight on the bank’s part, or it can be done intentionally in the hopes that you will not realize the mistake. Either way, it is illegal for a lender to foreclose a mortgage greater than the affordable housing limit.
I Reside in Affordable Housing and I Received a Foreclosure Complaint. What Should I Do?
If you reside in affordable housing and you receive a foreclosure complaint, the first thing you should do is check to make sure the foreclosure amount is not greater than the amount permitted. If it is, this loan was illegal and invalid in the first place, and the foreclosure cannot proceed. Don’t hesitate to call your township with any questions: they will be able to tell you your property’s mortgage limit.
If you have received an affordable housing foreclosure complaint, and you believe they are attempting to foreclose an amount that exceeds the limit for your property, contact the law office of Ira J. Metrick today. We may be able to halt the foreclosure proceedings and assess your options for getting back on track with your mortgage payments.