Newark mayor-elect Baraka set to help homeowners: Opinion

By Star-Ledger Guest Columnist
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on June 24, 2014

By John Atlas


Newark mayor-elect Ras Baraka has proposed a plan to help homeowners keep their foreclosed properties.



Newark’s recently elected mayor, Ras Baraka, has taken a bold step to address one of the city’s and state’s most serious crises.

Last month, Baraka persuaded his city council colleagues to adopt a resolution that will help an estimated 1,000 homeowners save their homes from foreclosure. If finally adopted, the city will use its legal authority to protect homeowners trapped in underwater mortgages, where their payment balances are higher than the fair market value of the property.

The city would contract with a private investor to purchase these mortgages and repackage them at terms homeowners can afford, based on the current market value of their homes.

Because of the failed leadership of Gov. Chris Christie, New Jersey tops the list of states struggling to overcome the foreclosure crisis. A new report, “Underwater America: How the So-Called Housing Recovery is Bypassing Many Communities,” released by the Haas Institute at the University of California Berkeley, found that Newark, Elizabeth and Paterson rank Nos. 2, 3 and 4 among the cities with the highest percentage of underwater homes.

The crisis was caused by Wall Street’s reckless practices, including the epidemic of subprime mortgages, which banks targeted to low-income areas, particularly communities with a high proportion of minority residents.

When the housing bubble burst in 2007, many homeowners saw their homes suddenly drop in value, leaving thousands of homes in North Jersey at the brink of foreclosures.

Working with Baraka and council leaders, New Jersey Communities United — a growing grassroots force made up of low- and moderate-income Newark residents — is committed to using its power to help make sure Baraka’s plan succeeds.

The city will begin the effort by asking the companies that own or service the underwater mortgages to sell them to the city through a third party.

If they refuse, the city will use its eminent domain authority to purchase the loans at current market value, based on appraisals. The city will work with an investor to sell the mortgages back to existing homeowners at the current value. Not only will families be able to stay in their homes, but the money they save on mortgage payments will be spent helping to sustain and grow local businesses.

Instead of negotiating with innocent homeowners after the crash, the trustees for these mortgages — owned by dozens of distant investors as part of a pool — claim they lack the authority to modify them.

Using the city’s power of eminent domain to modify the underwater mortgages will address blight in the city caused by vacant and abandoned homes, and save residents from becoming homeless.

NJCU, which lobbied for this plan, appears to be playing an important role linking and mobilizing Newark’s residents in support of Baraka’s agenda.

On the same evening Baraka led the vote on the housing issue, he also visited the Newark Students Union during its sit-in at Newark Public Schools headquarters.

NJCU is not only organizing homeowners to support the innovative use of eminent domain, it has also adopted the Newark Students Union, providing the young leaders with space to meet, resources for their campaign work and professional guidance from experienced organizers.

The students are fighting against what they believe is the myopic, Christie-led privatization of public schools that’s undermining education reform.

Baraka’s agenda won’t come easily. His foreclosure proposal, which is similar to one proposed in Richmond, Calif., is controversial and will face strong opposition.

But he appears to understand what liberals too often ignore. To be successful at politics and policy requires a combination of “inside” political maneuvering and “outside” mobilizing and protest. We’ll soon learn how adept Baraka (the insider) and NJCU (the outsider community group) are at joining forces to make Newark a more livable city.

John Atlas, a resident of Montclair, is president of the National Housing Institute.

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