During the housing bubble, investment banks chopped up many of these substandard loans and repackaged them into mortgage-backed securities, which ratings agencies then mislabeled as secure investments. That house of cards began to collapse in 2007, leading to the Great Recession.
In the aftermath, participants said lenders generally have been less willing to negotiate with minority borrowers. Foreclosures are occurring at a rate of 17 per 1,000 households in minority communities like Irvington, compared to 10 per 1,000 in predominantly nonminority towns, according to Ofer.
Irvington’s initiative comes at a time when much of the business media is proclaiming “the foreclosure crisis is over” across the nation. But that’s not true in New Jersey.
In late October, the state surpassed 40,000 new foreclosures cases filed so far this year. That compares to 30,896 foreclosures brought in all of 2012, and is already the fourth-highest annual total since the state courts have kept track.
New Jersey Communities United found that Irvington residents have lost $300 million in property wealth from the local foreclosures and drop in housing values, Smith noted.
“I cannot think of more public purpose” than keeping taxpaying residents in homes and finding new occupants for vacant foreclosed properties, Ofer said.
“This is a good use of eminent domain,” said Mary Szacik of NJCU, an organizer of the eminent domain effort. “Six years into this crisis, we are still seeing people losing their homes.”