The law would have essentially created a state-run program to buy foreclosed properties and turn them into affordable housing.
A piece of legislation in New Jersey that would have essentially created a state-run program to buy foreclosed homes and properties and turn them into affordable housing has been vetoed by Republican Gov. Chris Christie — for the third time.
Christie vetoed the Residential Foreclosure Transformation Act on Monday and told state lawmakers they should rely on the $300 million in federal funds the state gets to help families who are struggling with paying their mortgage, “as opposed to the unavailable and, in some cases unidentified, state funding sources that this bill relies upon.”
“The state is committed to helping its citizens avoid foreclosure through the New Jersey Housing and Mortgage Finance Agency’s mortgage foreclosure prevention programs,” Christie said in his veto message. “Sending the New Jersey Residential Foreclosure Transformation Act to me for a third time is not the charm.”
Kevin Walsh, the associate director of the Fair Share Housing Center in New Jersey, called Christie’s veto “short-sighted.”
“The governor doesn’t care about New Jersey’s foreclosure problem. He would rather people lose their homes than sign a sensible bill that would cost the state nothing,” Walsh said.
The New Jersey governor also vetoed legislation that would have expanded the state’s HomeKeeper Program, which assists homeowners who are at risk of losing their homes. According to the organization’s website, the program is funded through a federal grant and offers as much as $48,000 in “forgivable mortgage assistance” to New Jersey homeowners who are at risk of losing their homes to foreclosure.
State Sen. Ray Lesniak, a Democrat who authored the Residential Foreclosure Transformation Act, said he intends to pull the bill so that the legislature doesn’t pass it without including the affordable housing portion that Christie vetoed.
Lesniak said he was unsure why Christie remained opposed to the legislation since it had been endorsed by business, banking and affordable housing advocates as well as the New Jersey State League of Municipalities. He told local media he planned to introduce another version of the bill in the future.
“We can’t leave the state without a means for providing its affordable housing obligation,” he said.
Lesniak pointed out that while Christie has rejected using additional funds for affordable housing, the governor doesn’t seem to have a problem embracing the use of state funds to rebuild homes in the nine counties hit hardest by Hurricane Sandy.
The Christie-endorsed hurricane recovery program “does exactly the same thing (as the Foreclosure Transformation Act) for areas hit by Sandy, but there are needs across the state,” Lesniak said. “Sixteen other counties have the same needs, and he’s ignoring them.”
One reason Christie may have vetoed the Foreclosure Transformation Act is the identity of one of its most vocal opponents — the New Jersey chapter of the conservative group Americans for Prosperity. The group was concerned that this “bailout” would help banks and lenders and turn “market-rate homes into affordable housing,” according to PhillyBurbs.com.
But according to William Black, a former senior financial regulator, programs to help Americans avoid foreclosure don’t come close to matching the help the banks received.
“This crisis is roughly 70 times larger than the savings and loan crisis, so you should be seeing an effort absolutely unparalleled in U.S. history. Instead you are seeing an effort that is considerably smaller than the effort made in the savings and loan crisis,” he said.
Should the government get involved?
As Mint Press News previously reported, foreclosure filings in May dropped 28 percent from 2012 levels. However, there are still 1.3 million properties in some stage of the foreclosure process across the U.S.
The large number of foreclosures is driven partly by lenders’ use of a process called dual tracking, where the banks continue the process of foreclosing on a home while simultaneously considering a borrower’s application to qualify for an alternative, such as a loan modification.
Minneapolis resident Rose McGee was a victim of dual tracking. She told Mint Press she worked hard to buy a house, pay her taxes and live the American Dream, but the economy altered her ability to afford her mortgage payments.
“Unfortunately like many other Americans I was laid off from a job I loved. When I regained employment, CitiMortgage promised to work with me to modify my loan — but at the same time as they were reassuring me that they were going to work with me, they sold my home from under me,” McGee said.
The state of New Jersey has a foreclosure rate around 9 percent, which is higher than the national average rate of 1 percent. Though residents of the Garden State have higher household incomes than the national average, unemployment in the state is also higher than the national average — 9.3 percent compared to 7.8 percent.
“If the foreclosure crisis has taught us anything, it’s that not everyone should be a homeowner and that a strong rental policy can be a good thing for the country,” Mary Cunningham, author of “Preventing and Ending Homelessness — Next Steps,” said. “Perhaps some of the tax subsidies going to homeowners could be used to build affordable housing because the market doesn’t do it. We need more housing vouchers too. Some are nervous about increasing the housing voucher program, but the program works. Vouchers can help people get stable housing and are typically used for only a few years.”
In a 2009 report for the Urban Institute, Mary Cunningham said that the U.S. should be investing more in affordable housing and altering tax policies to support rental housing.
Cunningham said research has proven affordable housing ends homelessness for people and added that “we have a real housing need in this country.”
Minnesota Congressman Keith Ellison seems to agree.
“Look, we’ve had at least 4 million foreclosures across this country, we’ve had literally thousands across this community. Every time someone is foreclosed upon it means someone will be displaced, it lowers the tax base and it adds another person to the ranks of the homeless. It’s just an overall bad policy. We need to step up and do something about it,” Ellison, a Democrat, told Mint Press News.
“It’s the banks who packaged these loans with no standards of underwriting. I stand with Rose and all these folks in foreclosure. All we want is some reasonable negotiation and that’s not what we’ve been getting,” Ellison said. “I’m on the side of Rose McGee, not the side of Fannie, Freddie or Citi.”