New Jersey is stepping up efforts to come to the aid of hurricane victims in Puerto Rico, including to address concerns about any indirect links between the state’s public-employee pension system and a potential mortgage crisis on the storm-ravaged island.
The intervention so far has involved both the executive and the legislative branches, with Gov. Phil Murphy creating a special commission to work on issues related to Puerto Rico, and the likelihood that homeowners on the island could soon be targeted for foreclosures.
Members of the New Jersey State Investment Council, a panel that sets policy for the $77.5 billion pension system, have also urged a private-equity fund that the retirement plan owns a stake in to meet with advocates for Puerto Rican homeowners. The fund, TPG Capital, has ties to another company that has pursued foreclosures on the island, and investment council members expressed their discomfort during the panel’s last public meeting with the pension system profiting in any way from hardships many Puerto Ricans are still facing following 2017’s Hurricane Maria.
Meanwhile, state Sen. Teresa Ruiz (D-Essex) has introduced legislation that would prohibit the pension system from investing in any company that is “directly or indirectly” involved in pursuing mortgage foreclosures on the island in the wake of Maria. Right now, Puerto Rican homeowners are generally protected from foreclosures under a moratorium put in place by the federal Department of Housing and Urban Development, but that hold is set to expire on March 19.
“Our state should not be in the businesses of profiting from investments in companies that pursue home foreclosures and ignore the suffering and dire financial circumstances facing the residents of Puerto Rico,” Ruiz said.
Estimated 90,000 behind on mortgages
According to recent reporting by the New York Times, an estimated 90,000 borrowers in Puerto Rico fell behind on their mortgages as a result of Maria, which hit the island last September. Thousands of New Jersey residents [https://www.njspotlight.com/stories/16/12/21/nj-homeowners-still-struggling-with-sandy-damage-may-get-mortgage-relief/|faced similar challenges] in the wake of 2012’s superstorm Sandy as they were forced to pay rent for temporary housing and also cover the mortgages on their damaged homes.
In Puerto Rico, some of the owners of the mortgages include major investment banks like Goldman Sachs and Credit Suisse, but also companies with ties to TPG Capital and Blackstone, another private-equity fund that the state pension system owns stakes in, the New York Times reported. Some of the looming foreclosures are conventional mortgages, but there are also reverse mortgages that have been set up with senior citizens who are required to make property tax and homeowners insurance payments in order to receive payouts.
New Jersey is one of the U.S. states that has the strongest ties to Puerto Rico, with an estimated 468,200 Puerto Ricans living in New Jersey as of 2014, according to the Center for Puerto Rican Studies. Only Florida and New York have larger Puerto Rican populations, the center said. Puerto Ricans make up a full 5 percent of New Jersey’s overall population.
Lines of communication
During the investment council’s February 1 meeting, Chairman Tom Byrne and other members of the panel were urged by Maribel Soto, a member of the immigrant-advocacy group Make the Road New Jersey, to intervene with Blackstone and TPG on behalf of Puerto Rican homeowners. In response, they told Soto they would encourage officials from TPG to open up communications with advocates for the homeowners, which is something Blackstone had already agreed to do.
Treasury spokeswoman Jennifer Sciortino said yesterday that meeting has now been set up and will be held in early March.
“Discussions with both TPG and Blackstone remain ongoing,” she said.
Meanwhile, on February 12, Murphy announced the formation by executive order of the state’s Commission on Puerto Rico Relief, appointing an 18-member panel to help coordinate New Jersey and federal agencies to better assist Puerto Ricans who were affected by Maria. The panel’s members include Ana Montero, chief executive of the American Red Cross of New Jersey, and Gualberto “Gil” Medina, executive vice president of the CBRE real-estate firm. One of the specific issues that the commission has been tasked with examining, along with matters related to utilities and tourism, is whether the federal moratorium on mortgage foreclosures can be extended beyond March 19.
“The federal response has been insufficient and we must step up as a state to help our brothers and sisters on the island,” Murphy said.
Ruiz introduced her legislation on February 22, pointing to NJ Spotlight’s coverage of the foreclosure issue in a news release that was issued on the same day.
Her bill would call on the pension system to divest any stakes in private-equity funds that have financial ties to companies that aggressively pursue home foreclosures in Puerto Rico during a declared moratorium, any extensions of the moratorium, and also “during periods of lapses in extensions of a moratorium.” It adopts a similar approach to investment bans that have already been enacted by lawmakers to prohibit the pension system from having financial ties to Iran, Sudan, and any companies that are boycotting Israel to protest that country’s treatment of the Palestinians.
“It is unconscionable that companies are targeting victims of this disaster with foreclosure actions,” Ruiz said.
In a statement provided by Make the Road New Jersey yesterday, Soto said she was encouraged by the recent actions taken by Murphy and Ruiz, but remains concerned about the looming expiration of the moratorium on foreclosures.
“So far, HUD has not agreed to an extended moratorium, and while TPG has agreed to meet with advocates, neither TPG nor Blackstone have committed to a further moratorium on foreclosures,” Soto said. “As the foreclosure deadline – March 19th – approaches our state must stand up to ensure we do not invest taxpayer dollars in bad actors that are causing further harm to struggling Puerto Rican families.”