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New Jersey offers programs to forestall foreclosure

New Jersey residents worried about losing their homes to foreclosure soon will have three state programs to turn to for help.

New Jersey residents worried about losing their homes to foreclosure soon will have three state programs to turn to for help.

"The magnitude of the foreclosure crisis has made many New Jersyans feel that maintaining their dream of home ownership is beyond their control," said Gov. Corzine, who signed legislation yesterday creating two of the programs. "It shouldn't be."

State officials announced the start of the third program, which allows homeowners facing foreclosure to undergo mediation.

That program encourages borrowers and lenders to reach an agreement, with the help of a neutral mediator, allowing residents to keep their homes. It was created through a joint effort of the judiciary, the Office of the Attorney General, the Housing Mortgage Finance Agency, the Public Advocate, the Department of Banking and Insurance, and the nonprofit Legal Services of New Jersey.

"The difference between calling or not calling our hotline could be the difference between keeping a home or losing a home," said Attorney General Anne Milgram.

The state anticipates that as many as 16,600 homeowners may participate in the mediation program.

The guidelines for the two programs created by the legislation signed yesterday are being drafted. The state anticipates starting the programs this spring.

The Mortgage Stabilization Program will allow homeowners to apply for loans of up to $25,000 to reduce mortgage payments to affordable levels. The program is limited to homeowners below income limits that vary according to county.

The Housing Assistance and Recovery Program will help homeowners facing imminent foreclosure to stay in their homes while paying rent until they are able to buy back their homes.

The state has allocated $25 million for the mortgage program and $15 million for the recovery program, drawing the money from a fund intended to reduce long-term debt.

Overall, the state hopes to stave off at least half of the 60,000 foreclosures anticipated for 2009; there were an estimated 48,000 in 2008.

Housing advocates praised the programs.

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a watchdog coalition, predicted that foreclosures in New Jersey will increase next year as home values continue to decline, subprime adjustable mortgages reach their peak rates, and adjustable mortgages that were reset to artificially low rates last year resume high rates of interest.

Salowe-Kaye called the three programs "a giant step forward in responding to the unprecedented foreclosure crisis we are facing in New Jersey."