A bill passed by the New Jersey state legislature would discourage investors from buying and flipping homes while giving households that have experienced foreclosure first bidding rights on auction properties.
As Ashley Balcerzak reports for NorthJersey.com, “New Jersey may make it easier for family members, lower income bidders and community nonprofits to purchase foreclosed homes under a bill sent to Gov. Phil Murphy on Wednesday reworking the sheriff's sale process to prioritize these buyers and discourage large investors from flipping those properties.”
Residents who have experienced foreclosure or their family members would get the first opportunity to bid on the foreclosed property or the right of first refusal at the bid price. “And if a distressed homeowner can’t secure financing, they or a family member can request that a community development group buy the property and the nonprofit would have the second right of refusal, or second shot, at the bid price. If a housing nonprofit wins the bid on a foreclosed property, it would be required to restore and sell the house to a low-income family making no more than 120% of the county’s median income, or else rent the home to a family making below 100% of the county’s median income.”
As the article notes, “New Jersey consistently tops rankings of states with the highest foreclosure rates in the country. Data from May 2022 shows that one out of every 2,346 housing units were in foreclosure in the Garden State, the most behind only Illinois, according to a report from ATTOM, which analyzes nationwide real estate data.” On top of that, “A Rutgers study found almost half of residential sales in Newark went to institutional investor buyers, which contributed to ‘rapidly rising rents, decreased homeownership, higher barriers to affordable housing production goals, renter displacement and less stable communities,’ according to report by authors David Troutt and Katharine Nelson.”
The article outlines how the program would work and the restrictions placed on buyers which aim to “keep the wealth in the community, to empower residents through homeownership and not just serve as low hanging fruit to outside investors who are trying to come in and capture these properties for pennies on the dollar,” according to the bill’s sponsor, Assemblywoman Britnee Timberlake, D-Essex.
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