PROTECTIONS AGAINST FORFEITURE, FORECLOSURE, AND RETIREMENT SAVINGS GAP ADVANCE IN LEGISLATURE

Legislation that made it through various committees on February 7 would make New Jersey a better and fairer place, enhancing the financial security of retirees, helping people prevent the loss of their homes through foreclosure, and protecting against abusive civil asset forfeitures.

I have written about the Secure Choice Act before, which would establish a state-run retirement savings plan for people whose employers do not offer one. The legislation is in response to studies showing that most people do not save enough on their own for retirement, even though Social Security payments are not enough for seniors to live on—the so-called “retirement savings gap.”

The “New Jersey Secure Choice Savings Program,” which would be created by A-4134 would boost retirement savings and help plug the gap because it is an opt-out program in which you are automatically enrolled unless you affirmatively choose not to be. Businesses with 25 employers or more and no plan of their own must enroll employees, make the deductions for them, and turn the money over to the state to invest and manage on the employees’ behalf. Smaller employers would have the option to do so. The default contribution rate is three percent but participants could choose a different rate at the start and, after that, once each year during an enrollment period when those who previously opted out could change their minds and opt in.

As with an employer plan, there would be an automatic payroll deduction that would go into an IRA for the benefit of the employee, where it would grow over the years. There is no employer contribution, but the upside is that the account follows is portable and follows an employee who moves from one job to another and continues to grow.

The bill has already passed the Assembly, which approved it on December 17 by a 54-24 vote.

The Senate Labor Committee vote (4-0) on December 3 and now the Senate Budget and Appropriations Committee’s vote (11-1) on February 7 clear the way for it to be brought to the Senate floor for final passage.

The Senate vote is expected to take place on February 21. Please let Senate President Stephen Sweeney and your own senator know that you support Secure Choice.

The lead organization pushing for passage has been AARP-NJ but the measure has broad backing from a variety of other groups, including unions, faith groups, and consumer advocates, such as Citizen Action, the NAACP, New Jersey Policy Perspective, and New Jersey Appleseed.

Forfeiture

Four forfeiture-related bills advanced on February 7 during a hearing before the Assembly Law and Public Safety Committee.

They are aimed at civil asset forfeiture, a process by which law enforcement can seize and keep property suspected of being used in or connected with actual or planned criminal activity, even if no crime has been charged, never mind proved. The assets, which can be cash, illegal narcotics, cars, jewelry, electronics, and other types of property, can be kept by the law enforcement agencies that seize them. Such “policing for profit” is ripe for abuse because it provides a perverse incentive for enforcement of the law based on the property that can be seized rather than on the basis of public safety or the public good in general.

To make it even worse, civil asset forfeiture is disproportionately used against people of color, who are more likely to be stopped by police, as discussed in a recent report from the ACLU-NJ, about which I have written.

In contrast to the government’s burden to prove every element of a crime beyond a reasonable doubt in order to impose criminal penalties, it gets to keep seized assets if it shows by a preponderance of the evidence that they represent proceeds of a crime, was used or meant to be used in furtherance of a crime, or was “integral” to it.

Owners can only get their property back by proving they were not involved in or aware of the crime and did all that could reasonably be expected to prevent such use of the property by someone who might have otherwise been using it without their consent or knowledge. Many of those whose property is taken lack the money and/or sophistication to even try to put up a fight.

The ACLU report recommended several reforms: allowing forfeiture only where there is a criminal conviction, with all the attendant protections of that process; eliminating the profit motive by no longer allowing law enforcement to keep the confiscated assets; and making the process more transparent.

The bills that advanced last week would meet some of those goals.

First, A-3442 would shine more light on how civil asset forfeiture is used and thus help deter abuses. County prosecutors would be required to submit quarterly reports to the Attorney General with extensive information about each seizure of property, including the value of property seized and forfeited and its final disposition; the outcome of any criminal action related to the seizure; whether the owner filed a counterclaim; and the law enforcement purpose for which retained property is utilized, as well as any other information required by the Attorney General. The report would also have to indicate the amount of forfeiture funds received or the value of forfeited property by law enforcement agencies in the county, federal agencies, or joint task forces.

The ACLU-NJ’s Liza Weisberg, testifying in support of the bill, noted that New Jersey’s laws on civil asset forfeiture have been called some of the worst in the country and that abolishing it entirely would be preferable. Nevertheless, this bill is a step toward “holding government officials accountable, promoting public trust and making New Jersey a fairer place for all,” she said. Weisberg urged the bill be amended to add a requirement that prosecutors track and report demographic information on those whose property is seized, including race, ethnicity, age and gender, so that it is possible to know who is being impacted.

A-3442’s Senate counterpart, S-1963, passed that house by a 37-0 vote on July 1. And no one has voted against the bill in the three committee that have dealt with it thus far: Senate Law & Public Safety (5-0 on May 31), Senate Budget and Appropriations (12-0 on June 11) and the Assembly Law & Public Safety (8-0 on February 7). The next step is a hearing in the Assembly Appropriations Committee.

Weisberg also testified regarding another bill, A-4970, just introduced on January 28, which would require that certain seized assets (other than prima facie contraband) could not be forfeited absent a criminal conviction. It would apply only to cash or cash equivalents worth $1,000 or less or other property worth $25,000 or less.

Remarking that “due process does not depend on a dollar sign,” Weisberg pointed out that it did not make sense to protect lower value property but not that of higher value. She acknowledged though that when less valuable property is seized it is often not cost effective for the owner to challenge its forfeiture in court but pointed out the bill would give law enforcement more incentive to go after larger assets.

The better solution, as Weisberg told the committee, is to fold civil asset forfeiture into criminal asset forfeiture—effectively abolishing it—where owners have the benefit of the constitutional protections attached to criminal proceeding including the burden of proof beyond a reasonable doubt.

A-4970 was approved by a 7-0 vote and referred to the Assembly Appropriations Committee on February 7, the same day the Senate version, S-3441, was introduced. It awaits a hearing in the Senate Law and Public Safety Committee.

The two other forfeiture-related items that moved forward, both by 8-0 votes, were A-4969, which would establish a Fairness in Asset Forfeiture Proceedings Task Force to study the right to legal representation in such proceedings, and AR-222, a resolution calling on the New Jersey Supreme Court to consider reducing court fees in civil asset forfeiture cases so that owners can afford to try to reclaim their property.

A lawyer from Legal Services of New Jersey, which provides legal representation for the indigent in civil matters, pointed out that because private attorneys have little incentive to take civil forfeiture cases and the Public Defender’s Office does not handle them, they raise “serious access to justice concerns.” He suggested additional reforms such as exempting from forfeiture cash below a certain amount or a car needed for work, granting judges discretion to determine that a forfeiture is excessive and boosting the standard for prosecutors to show the property’s connection to a crime from “preponderance of the evidence” to “clear and convincing evidence.”

Foreclosure

The legislation concerning foreclosures was heard in the Assembly Community and Urban Affairs Committee.

The packet of 10 bills, which all won approval by a 4-0 vote (one member, Christopher Connors, R-Ocean, was present but not voting) embodied recommendations put forward by the Special Committee on Residential Foreclosures. Established in May 2017 by New Jersey Chief Justice Stuart Rabner, the Special Committee was tasked with reviewing current practices, policies, court rules and legislation and suggesting ways to prevent foreclosure backlogs while upholding due process rights.

Judge Glenn Grant, the Acting Administrative Director of the Courts, was chairman and other members included legislators, lawyers, bankers, court staff and sheriffs (who carry out sales of foreclosed properties). Their report, issued in August 2018, had 17 specific recommendations in the areas of public outreach, proposed legislation and judicial solutions.

New Jersey requires a judicial process for foreclosure which better protects the rights of homeowners but the notice and hearing requirements and judicial scrutiny of documents and procedures can make it a lengthy process. Nonjudicial foreclosures, which are done in about 30 states, are quicker but more subject to abuse and error.

As the report recounts, foreclosure filings in New Jersey ran about 25,000 per year in the years leading up to the collapse of the housing market but once that occurred, the number surged to about 65,000 in 2009 and stayed at a high level for nearly a decade until recently dropping to “normal levels.”

Declaring a “mortgage foreclosure crisis,” the judiciary launched a Foreclosure Mediation Program in 2008 to help address it. One of the 10 bills, S-1244, the Foreclosure Mediation Act, would codify the court mediation program and create a dedicated “Foreclosure Mediation Fund” to pay for it, including mediator compensation. The money would come from a new $75 fee on foreclosure filings and fines paid by lenders for not complying with their mediation obligations.

Eligible homeowner would be allowed to initiate mediation and S-1244 would make sure they are aware of that option by requiring they be informed of it, twice—with the notice of intended foreclosure and on the filing of the foreclosure complaint.

The other foreclosure bills are:

S-3412, which would require the Department of Community Affairs to create and maintain a database of foreclosed properties in the state with an interactive mapping component. The database would have to show location, current owner, and the dates of the lis pendens, foreclosure complaint and foreclosure judgment. The data would be provided in electronic form on a daily basis by the courts and the county clerks and sheriffs, and paid for by an added $30 fee on the recording of deeds and lis pendens.

S-3413, which would help speed up the process of getting empty houses occupied again by requiring lenders who have initiated foreclosure against “vacant and abandoned” residential properties to proceed by summary action (current law lets them do so) and allow them to seek expedited sale within 60 days for such properties by certifying to their vacant and abandoned status even if that is not stated in the foreclosure judgment. The bill also adds representatives of common interest community associations to those whose statements can be used for finding property vacant and abandoned.

S-3414, which would permit common interest community associations (not just condominium ones as under current law), other than cooperatives, to record a lien for unpaid assessments which are to have limited priority over prior recorded mortgages and other liens (but not tax liens) to the extent of nine months’ (current law is six months) worth of those assessments.

S-3415, which would require a mortgage creditor foreclosing on residential property to file with the lis pendens and complaint the name, address, and telephone number for its representative and any servicer responsible for receiving complaints of property maintenance and code violations and if the creditor or servicer is located out of state, such information for an in-state representative or agent would have to be provided. Any changes would have to be filed within 10 days.

S-3416, which would extend the New Jersey Mortgage Residential Act’s standards and practice requirements to out-of-state mortgage lenders, mortgage brokers, and other licensed out-of-state persons and entities involved in residential mortgage lending here.

S-3417, the Mortgage Servicers Licensing Act, which would require any person acting as a mortgage servicer to obtain a license from the Department of Banking & Insurance for each office in New Jersey, subject to meeting certain financial, character, and fitness criteria. Licensees would have to: make annual filings with information on the mortgages they service; file a surety bond, fidelity bond, and evidence of coverage: maintain adequate records and a schedule of fees charged; and on assigning the servicing rights, make certain disclosures to the mortgagor. In addition, the bill prohibits certain unfair and deceptive practices and authorizes the state to conduct investigations of mortgage servicers and to suspend, revoke, or refuse to renew a mortgage servicer license for certain specified reasons.

S-3418, which would reduce the statute of limitations for residential mortgage foreclosures from 20 years to six years from the date of default.

Senator Troy Singleton, D-Burlington, the Chair of the Senate Committee, was a sponsor on all 10 bills. Senator Steven Oroho, R-Warren, a sponsor on nine, was a member of the Special Committee. The other legislator member of the Special committee was Craig Coughlin, D-Middlesex, who is now Assembly Speaker.

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