Democratic Candidates Agree: Christie Fumbled Foreclosure Crisis
Senate and gubernatorial hopefuls blame GOP, big banks for squeezing homeowners.
New Jersey’s Democratic gubernatorial and senatorial candidates have found a point of agreement: They all blame Republican Gov. Chris Christie and the big banks for mishandling the state’s foreclosure crisis.
A host of Democratic politicians gathered on a sunny side street in Newark’s Vailsburg neighborhood to support Grace Alexander, a medical aide locked in a four-year struggle with Bank of America over the fate of her home.
The event, organized by the labor union to which Alexander belongs, gave state Sen. Barbara Buono, the party’s gubernatorial standard-bearer, and four competing U.S. Senate candidates the chance to stand shoulder-to-shoulder and cut loose before a throng of television cameras.
Buono said slow action by the state caused “families to be displaced from their homes” while whole neighborhoods have been undermined by lowered property values due to vacant homes. This is “preventing our economy from coming back,” Buono declared to applause.
But it was city officials who told residents what they most wanted to hear. They threatened to use eminent domain powers to take over properties that are vacant or in foreclosure limbo, in order to clear them to be put back on the market.
Using eminent domain against bank-held mortgages has stirred controversy elsewhere in the nation, but some speakers suggested it in April at a Newark council committee hearing.
“The barriers in our way include a governor who will not do his job,” Councilman Ron Rice Jr. said to cheers. “But there are certain things that communities can do of our own volition, using our own powers.”
While stopping short of Rice’s endorsement of the eminent domain tactic, Councilman Darrin Sharif said he is ready to consider the move. Mayor Cory Booker, considered the front-runner for the party’s U.S. Senate nomination, hinted at supporting the idea but did not endorse it directly.
“We’re going to explore all the tools in the toolkit” of municipal powers to fight the tide of foreclosures swamping much of the city, Booker said. These neighborhoods suffering from foreclosures includes Alexander’s traditionally stable, working-class neighborhood, the local officials noted.
In the financial wreckage left by the Great Recession, banks and investors have purchased large swaths of housing in Newark and other urban areas. In April, Communities United New Jersey presented a report estimating vacant properties cost the city $56 million in police, fire, health and other costs from 2008 through 2012.
Groups like CUNJ and 1199 Service Employees International Union Health Care Employees East, which sponsored the press conference, fear those properties are being held off the market to inflate prices artificially.
A new report by CoreLogic, an Irvine, Calif., real-estate and financial data analysis firm, put New Jersey back in second place, behind only Florida, for the highest percentage of home foreclosures, at 6 percent, and mortgages delinquent by a year or more, 10.6 percent.
Yet the company found that only 3,321 New Jersey mortgage foreclosures were completed in the previous 12 months, almost exactly 100,000 less than in Florida.
Although still high in historical terms, foreclosures have declined dramatically across much of the nation over the past year, said U.S. Rep. Rush Holt (D-12th) another of the Senate contenders.
“But in New Jersey, the numbers show it could get worse before it gets better,” Holt said. “Our state has 300,000 properties that are vacant, and there are more foreclosures in process than have already been completed.”
Meanwhile, Buono said the Christie administration “sat on” $300 million in federal foreclosure aid, the governor took another $75 million from the national foreclosure settlement to plug a budget hole, and has vetoed legislation to beef-up state programs to help homeowners facing foreclosure.
“Pay attention to what happens in Trenton,” said Assembly Speaker Sheila Oliver (D-Essex), another Senate hopeful. Christie’s next test, according to Oliver, is a package of economic development legislation, which she expects him to sign because “it will benefit developers.”
A small piece of the legislation, however, is intended to help prevent foreclosures. It remains to be seen whether Christie will support it.
Christie spokesman Michael Drewniak said the Democrats are “mischaracterizing and politicizing the issue.”
Although state officials have acknowledged that the initial HomeKeeper program to help address the foreclosure crisis was slow to respond, it was reorganized by the administration in 2012. It has now closed on 3,748 applications and disbursed $148.6 million of that $300 million, said Drewniak. The rest of the money, allocated to states with the worst unemployment and foreclosure numbers, “is already spoken for in terms of applications being processed and received,” Drewniak said
Meanwhile, New Jersey’s Housing and Mortgage Finance Agency also has ramped up its aid application process, closing on more than 260 per month and 925 in the second quarter of this year, he said. The average allocation is $40,000 per household, he said.
U.S. Rep. Frank Pallone (D-6th Dist.) was critical of Christie, but emphasized that the governor was not the only villain on the scene.
“A big part of this is the banks,” he said. “They created this crisis. They caused the bubble that crashed the economy, they took the bailout, and now they’re walking away.”
“When I heard about your situation, I almost didn’t have to ask which bank,” Pallone told Alexander, “because Bank of America is one of the worst.”
Alexander, who emigrated from Guyana 20 years ago, said the bank’s representatives misled her 12 years ago when they convinced her to take on an adjustable rate mortgage with a large balloon payment.
“They told me I could renegotiate it at any time before the balloon payment came due,” she said.
In 2008, when she lost one of her three jobs, Alexander said she tried to do just that. But her application was shuttled from office to office, and she could never get an answer. After getting support from the SEIU, she finally got an offer from Bank of America.
“But after the modification, I would be paying $300 more a month than before I asked them for help,” Alexander said.
Last month, former Bank of America employees filed affidavits in a Massachusetts court, saying they were rewarded for delaying or even denying qualified applications for mortgage modifications.
Periodically, management ordered them to “clean out” paperwork for pending applications, even if everything was in order, forcing customers to start over, according to the court documents.
In New Jersey, Bank of America has stepped up its outreach to customers this year, participating in recent events with federal agencies and nonprofit groups to assist some clients facing foreclosure. But the bank did not respond to requests for comment on the Democrats’ complaints.
The Democratic candidates said they do not intend to drop foreclosures as an issue, and suggested they may hold more joint events to promote it as a cause, along with increasing the minimum wage and other points where they agree with each other but see stark differences with Christie and other Republicans.
That approach clearly threw off some of the media assembled Tuesday in Newark, who responded with questions intended to get the discussion back to the campaign horse race.
But local activists said they intend to carry forward whatever attention they can take away from the Democratic event, with a Wednesday night hearing scheduled in Irvington to raise the issue of using eminent domain or other steps to deal with derelict foreclosed properties there.