From the Daily Record:
A New Jersey state senator wants to create a program to help homeowners refinances mortgages they can’t afford, mirroring a similar plan in Ohio.
Sen. Ronald Rice, D-Newark, said Wednesday that he plans to introduce a measure that would allow the state’s housing agency to borrow at least $100 million to offer 30-year fixed-rate loans to homeowners facing foreclosure.
”Many of my neighbors face real financial peril because of rising interest rates and changes to the housing market,” Rice said. ”More people are making late mortgage payments, missing payments altogether and going into foreclosure.”
Rice’s plan comes after a move by Ohio, which had the highest foreclosure rate among the 50 U.S. states at the end of 2006, to issue $100 million in taxable municipal bonds to help homeowners refinance mortgages they can’t afford.
A March 13 survey by the Mortgage Bankers Association found that Ohio’s foreclosure rate across all loan types was 3.38 percent while New Jersey’s was 1.85 percent.
The survey also showed Ohio had the highest rate of subprime loans in foreclosure at the end of 2006, at 11.32 percent, compared with New Jersey at 4.18 percent.
Rice blamed lenders for offering low introductory ”teaser” rates that reset higher after a certain period of time and for allowing subprime borrowers to get loans without making down payments or documenting their income.
He said the state was justified in bailing out homeowners and mortgage lenders who made the loans.
”It’s going to cost us a lot more if people become homeless,” he said in a telephone interview. ”We have a real problem out here.”
Rice said he needed to work with the administration of Gov. Jon S. Corzine to determine eligibility requirements and efforts to safeguard homeowners who refinance their loans from foreclosing again.