This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.

Amended Judiciary foreclosure mediation program bill clears committee

A bill designed to reduce the number of foreclosures in New Jersey cleared the Assembly Housing Committee last week, showing movement for the first time this session. The New Jersey State Bar Association (NJSBA) had concerns with the original bill, but recent amendments ameliorated most of them, and the association remains optimistic about the final form of the bill.

S-1244 (Rice)/A-664 (Jasey) was first introduced in 2012 to address what the Assembly Democrats say is a “staggering number” of foreclosures in New Jersey, and to help homeowners keep their homes. “Foreclosures not only affect homeowners, but neighborhoods and the state as a whole,” said Assemblywoman Jasey. “For far too long, we have led the country in foreclosures. The mediation services provided by this program can help homeowners avoid foreclosure and reinvigorate our housing market by reducing our dismal foreclosure rates.”

The association recommended amendments to the bill to address the imposition of sanctions for parties who fail to participate in the foreclosure mediation program in good faith. Specifically, the association had concerns with language that would put mediators in a position to breach the mediation-communications privilege in order to ascertain 'bad faith' and impose sanctions on destitute homeowners. In addition to these concerns, the association urged the sponsor to ensure that the lender appearing at mediation be authorized to enter into binding modification and to reconsider the imposition of a fee increase for such applications.

The amendments removed the language imposing sanctions for bad faith, instead imposing sanctions if a party does not attend mediation in person or by telephone. While the language still imposes sanctions, it removes the onerous burden of demonstrating that the party did not act in good faith to mediate. The association continues to raise concerns about the amount of the sanctions, but recognizes that they are up to the court's determination.

The NJSBA continues to work with the sponsors and to monitor the bill's progress. It remains generally supportive of the bill's overarching goal to reduce foreclosures in New Jersey.