“TO BORROW, TO BORROW . . . SHOULD NOT CAUSE SUCH SORROW”: WHY NEW JERSEY SHOULD ENACT LEGISLATION INCORPORATING A HOMEOWNER BILL OF RIGHTS (HBOR) AND A SERVICER’S DUTY OF LOSS MITIGATION
Cheryl Aptowitzer, Esq.*

Foreclosures blight neighborhoods, put financial pressure on families and drive down local real estate values, and consumers, made more cautious by a crippled housing market, spend less freely, curbing the economy’s growth. . . . In fact, the Urban Institute estimates that a single foreclosure costs $79,443 after aggregating the costs borne by financial institutions, investors, the homeowner, their neighbors, and local governments. However, even this number may understate the true costs, since it does not reflect the impact of the foreclosure epidemic on the nation’s economy or the disparate impact on lower-income and minority communities . . . .1

In 2012, California legislators, facing a grim economic situation which experts blamed, to a large extent, on the state’s high rate of foreclosures, had the foresight to pass a Homeowner’s Bill of Rights, resulting in a steep decline in foreclosures.2 Given New Jersey’s fragile economy, sluggish housing market, and the continued high rate of foreclosures, the state stands precipitously on the edge of a financial downward spiral.3 Now is the time for New Jersey legislators to return economic stability to the state, protect its homeowners, and ensure a brighter future by passing legislation incorporating a Homeowner’s Bill of Rights and a servicer’s duty of loss mitigation.
Part I of this Article will discuss the different events leading up to the national foreclosure crisis, including widespread fraudulent lenders’ practices, which resulted in the National Mortgage Settlement. This Article will highlight President Obama’s attempt to bring attention to the troubled housing market, Congress’s failure to respond to that attempt, and how, in the absence of a federal solution, California made the decision to pass groundbreaking legislation, with other states following suit. Part II will analyze New Jersey’s recent grim foreclosure statistics and forecasts, which reflect the need for action. Part III will present the findings of an important independent report outlining the insufficiency of current legislation and will also look to other states’ legislative proposals for ideas that New Jersey could incorporate in new legislation. Part IV will note the disparate impact that foreclosures have on minority communities and the need to protect New Jersey’s most vulnerable citizens from suffering a disproportionate share of the foreclosure problem. Part V will conclude that New Jersey should enact a Homeowner Bill of Rights and a servicer’s duty of loss mitigation so as to ensure that the brewing financial “perfect storm” passes over New Jersey’s landscape without wreaking havoc on our economy, real estate market, and homeowners.

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