Facing enduring foreclosure 'crisis,' Newark advocates look to eminent domain

By Dan Ivers | NJ Advance Media for NJ.com
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on July 31, 2015

ACLU New Jersey Executive Director Udi Ofer addresses a small crowd at a forum on Newark's foreclosure crisis on Thursday at St. Lucy's Church. To his left is 1199 Executive Vice President and former lieutenant governor candidate Milly Silva, along with other members of a panel who spoke on the subject.

 

NEWARK — When Grace Alexander bought her home in Newark, she thought she had finally reached the culmination of a long journey, one that began in her native country of Guyana nearly 20 years earlier.

"Coming to this country was exciting, I thought I was going to have the American dream. I felt the same way when I got my home," she said.

Before long, however, her dream appeared to have gone horribly wrong. She lost 2 of the 3 jobs she had been using to pay her bills, and was repeatedly turned down by Bank of America when she tried to modify her mortgage.

Falling further and further behind, she turned to everyone she could for help, including politicians from the White House to Newark City Hall.

"All I got (were) promises after promises. After all that I've done, I'm about to lose my home," she said.

Alexander is now just one of thousands of city residents still struggling to escape from foreclosure proceedings seven years after the country's housing market collapsed in 2008.

However, she and others concerned about the ongoing effects of the crisis are now pinning their hopes on an oft-maligned weapon that most governments prefer not to employ — eminent domain.

On Thursday, many of them were joined by local housing and civil rights advocates at a panel discussion hosted by NJ Communities United at St. Lucy's Church, where they hoped to push city leaders to employ the process and develop other policies to help ease the city's housing troubles.

Mayor Ras Baraka made an appearance at the event, and acknowledged that the city had been among the hardest hit urban areas in the state and even the country.

"We didn't get here yesterday. This thing happened over a period of time," he said.

According to housing data company RealtyTrac, 1 out of every 544 homes in Newark was in foreclosure in June. In some areas concentrated in the South and Central Wards, the rate was as high as 1 in 331.

The state as a whole is faring only slightly better, with a foreclosure rate of 1 in 584 last month. Roughly a quarter of those were so-called "zombie foreclosures" — homes that have been vacated by their owners — the highest percentage in the nation.

Baraka said he was pushing to engage large banks about purchasing homes in the foreclosure process for fair market value in order to keep residents from being displaced. If the banks resisted, he said he would consider using eminent domain to take them by force.

"The same way we're going to use eminent domains to develop properties, we should be able to use eminent domain to keep people in their homes," he said.

Advocates for homeowners say that banks have largely been unwilling or even unable to modify toxic mortgages for homeowners facing foreclosure, often because they have been pooled and sold off to private equity firms, which in turn split them up into smaller securities for investors.

In addition to foreclosures, a massive share of Newark-area homeowners are underwater on their mortgages, having purchased their homes at prices that averaged about $325,000 at the highest of the real estate bubble, but are now worth as little as half that.

Other cities in Essex County, including Irvington, have also discussed plans to use eminent domain to combat their own foreclosure and vacancy problems, though the process remains largely untested.

Udi Ofer, the executive director of the New Jersey American Civil Liberties Union, said his organization has discussed it with legal experts, and is confident it would prove a viable option for distressed homeowners.

"This has never been tested in the courts," he said. "But, if you look at past court decisions, we believe this is a legal way to save blighted communities."

Hopes were high for residents like Shirma Hodge, who said she was desperate to hang onto the home she shares with her husband and four children, and to keep it out of the hands of a bank or other institution.

"This is what we don't want in Newark," she said. "If we have to fight every day to keep them out of Newark, that's what we will do."

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