New Jersey Gov. Jon Corzine yesterday signed into law an initiative to prevent home foreclosures, with $12.5 million of funds previously allocated to pay down outstanding debt now being used to fund the program.
The new law is one of several bills that lawmakers are working on that will use $125 million of the state's $650 million debt defeasance fund. The plan is to tap into the $650 million fund to help meet such immediate needs as home foreclosures, supporting food pantries, energy assistance, legal aid, and loans to small businesses in an effort to help spur economic development in needy areas.
"During these unsettling economic times, we must remain committed to meeting the basic needs of New Jersey residents - shelter being chief among them," Corzine said in a prepared statement. "By addressing the foreclosure issue head on, we will keep families safe, keep communities strong, and preserve local economies throughout the Garden State."
Of the $12.5 million, the New Jersey Housing and Mortgage Finance Agency will receive $12 million for foreclosure mediation and counseling services. Another $500,000 will go to the administrative office of the courts for foreclosure intervention in seven New Jersey counties that are hardest hit by homeowners defaulting on their mortgages.
New Jersey has roughly $32 billion of outstanding debt, including $2.8 billion of GOs, with debt service costs taking nearly 8% of the state's operating budget. Corzine implemented the $650 million fund earlier this year from surplus revenue, with the goal of decreasing New Jersey's debt load and supporting infrastructure projects.
The law also allows the state to use $51.4 million of anticipated federal funds to help stabilize neighborhoods that are experiencing high foreclosure rates.