Sham Nonprofits Are Abusing NJ’s New Foreclosure Law, Senator Says

ESSEX COUNTY, NJ — A state law that was designed to protect vulnerable communities from home foreclosures is being rewritten due to “blatant abuse” from sham organizations that are exploiting one of its key clauses, a New Jersey senator says.

Sen. Britnee Timberlake (NJ-34) released an update about the Community Wealth Preservation Program last week.

Signed into law last year, the program makes it easier for homeowners, their relatives or nonprofits to buy back properties at sheriff’s foreclosure sales. This helps them compete with corporate-backed home “flippers” who want to purchase the properties to resell for profit. Read More: NJ Homeowners vs. Flippers: New Law Helps To ‘Level The Playing Field’

Sen. Timberlake helped to push the law over the finish line after Gov. Phil Murphy conditionally vetoed it in 2022. He signed a revamped version in January 2024.

Criticism of the law continued, however, with Ocean County halting a foreclosure auction that July amid complaints from bidders and worries that unproven nonprofit agencies were taking advantage of the situation.

NJ SENATOR: ‘REFORM IS COMING’

Timberlake issued an update about the law on April 9, saying that she supports suspending the nonprofit portion until a new bill can be written.

She wrote:

“The Community Wealth Preservation Program (CWPP) was established to protect communities from foreclosure and provide equitable access to affordable housing. However, the nonprofit provision of the program has been blatantly abused by organizations with no genuine interest in community development. The fraudulent organizations are manipulating the system, skirting affordable housing requirements and flipping properties for profit, ultimately working against the very purpose of the CWPP. Their formation and abuse are undercutting organizations such as Habitat for Humanity and other legitimate nonprofit affordable housing organizations.”

Timberlake continued:

“Recognizing these abuses, sheriffs and counties across the state are taking action to preserve the integrity of the program and protect local communities. In support of their leadership, I too am advocating for the temporary suspension of the nonprofit portion of CWPP until the new revised law I have drafted, passes. This safeguard will help prevent further exploitation and ensure that only credible nonprofits benefit from the program moving forward.”

The new bill will include a stricter process managed by the New Jersey Department of Community Affairs, Timberlake said.

Meanwhile, organizations that engage in “unethical practices” will be held accountable under the provisions of the current law, the senator added.

“Those found to have misused the program – failing to create affordable housing or neglecting to collaborate with tenants and property owners to maintain occupancy – will face prosecution,” Timberlake said.

Significant penalties – including fines of up to $500,000 per property – will be strictly enforced, she said.

“By standing with our sheriffs and county officials in taking decisive action, we protect communities, uphold the integrity of the CWPP, stop criminals and ensure the program continues to serve those who truly need it,” Timberlake said.

“Reform is coming, and this suspension is a vital step toward a stronger, more equitable system,” she said.

The state’s 34th Legislative district includes the towns of Belleville, Bloomfield, East Orange, Glen Ridge, Nutley and Orange.

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