NJ town to condemn mortgages?

The mortgage debacle in New Jersey is not over. Irvington, located next to Newark in Essex County, is considering the condemnation of mortgages on under-water properties in an effort to help restore value to the community.  Lots of luck.

Says Wayne Smith and the ACLU,

When the housing bubble burst in 2008, it sank the fortunes of millions of Americans who invested their money by purchasing a home when the real estate market was hot.

An estimated 1,775 homes in Irvington have been foreclosed upon since the burst in 2008, leading the township to spend precious revenue on maintaining and policing vacant and abandoned properties.

According to a report by New Jersey Communities United, “Irvington Home­wrecker,” home­own­ers lost nearly $300 million in wealth tied to their properties. It’s not surprising that Irvington has been hard hit by the foreclosure crisis. Communities of color across the country were targeted by unscrupulous banks peddling subprime mortgages.

The number of foreclosures in communities of color is 17 per 1,000 households, while predominantly white communities have seen 10 foreclosures per 1,000 households.

So how should Irvington and other towns respond to this crisis and protect residents from further community destabilization brought on by the toxic mortgages? Our answer: eminent domain.

Underlying this scheme would be the payment of "fair market value" for the mortgage, then the municipality would lower the balance and, therefore, payments of the property owner in an attempt to restore the community.

As posted in the blog below, homeowners would have to

owe more than their homes are worth and who meet a few other criteria. Using money from private investors, the township would pay the holders of those mortgages fair market value and renegotiate a new mortgage based on much lower principal amounts, reflecting the new depressed values of the homes.

 Lots of luck Mr. Mayor.  Read the full post here Irvington aims to tackle Wall Street's mess: Opinion | NJ.com and the news report here.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.

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