NJ Hard Hit by Underwater Mortgages

State Has 32 of Worst Zip Codes for
Foreclosure or Default

Cover_UnderwaterAmerica_webThe Haas Institute has released a new report, Underwater America, which examines “how the so-called housing ‘recovery’ is bypassing many American communities.

The report found that New Jersey has three of the cities across the country hardest hit by underwater mortgages in 2013 including:

  • Newark where 54% of homes are underwater and 1,346 homes were in foreclosure or default;
  • Elizabeth where 53% of homes are underwater and 567 homes were in foreclosure or default; and
  • Paterson where 49% of homes are underwater and 858 homes were in foreclosure or default.

New Jersey also had 32 of the hardest hit zip codes in 2013.

tenhardesthitThe report makes recommendations that would equally provide for recovery from the foreclosure for the hardest hit communities. These recommendations include:

  1. Loan holders—banks, government sponsored enterprises (i.e., Fannie Mae and Freddie Mac, which are regulated by the Fed¬eral Housing Finance Agency, FHFA), and investors—should re-duce the principal on underwater mortgages to current market values.
  2. If loan holders are unwilling or unable to reduce the princi¬pal on underwater mortgages to current market values, they should allow these loans to be purchased by publicly-owned or nonprofit entities that are willing to restructure them with fair and affordable terms.
  3. Local municipalities should use all options at their disposal to facilitate the goal of resetting mortgages to current market values, including the use of “reverse eminent domain” (the program proposed in Richmond, California and elsewhere) to acquire mortgages in order to restructure them with fair and affordable terms.
  4. Banks, government sponsored enterprises like Fannie Mae and Freddie Mac, and investors that own vacant homes that have already been foreclosed upon should sell them to publicly-owned or nonprofit entities that can convert them to affordable housing units for residents of the community instead of selling them to speculators.
  5. Local municipalities should use all options at their disposal to facilitate the goal of turning vacant, foreclosed homes into affordable housing. This includes the use of “reverse eminent domain” to acquire properties in order to convert them to affordable housing units for residents of the community and to prevent them from being purchased by speculators.

Click here for the full report.