New Jersey Town To Rescue Foreclosed Homeowners Through Eminent Domain

Search form

New Jersey Town To Rescue Foreclosed Homeowners Through Eminent Domain

New Jersey Town To Rescue Foreclosed Homeowners Through Eminent Domain
Mon, 11/18/2013 - by E. Tammy Kim
This article originally appeared on Al Jazeera America

IRVINGTON, New Jersey — Their narrow, two-story house on Garwood Place, tan with white trim, could use a fresh coat of paint and new plantings for the sidewalk flowerbed. It sits in a quiet neighborhood not far from Springfield Avenue, the retail thoroughfare connecting this working-class township to nearby Newark.

Paulette McQueen, 60, and her mother Lavinia Curry, 86, have lived in this house since 2003. “My mother always dreamed of having a home,” said McQueen, a solidly built woman with blonde hair and dark brown skin. But since 2010 their home has been a source of consternation as much as pride.

“We were one month behind, and I took [two payments] to Wells Fargo the next month," McQueen said. "They told me they wouldn’t accept it. Ever since then, they’re harassing my mother. They want me to sell her house.”

A new program, though, could provide McQueen and Curry some relief. At a press conference on Saturday, Irvington Mayor Wayne Smith announced the township’s plan to “take” and revalue foreclosed homes at market rates for the public’s benefit, using the legal doctrine of “eminent domain.” Should the plan move forward, Irvington could become the first municipality to seize and re-mortgage foreclosed properties.

“When you hear (‘eminent domain’), you usually think of people being talked out of their homes (for corporate development), but what we’re trying to do is recast it so that people can stay in their homes,” Smith said.

Experiment and Backlash

It’s a strategy spreading to cities and towns across the country. In late July, Richmond, Calif. made national news when it notified a group of banks that, barring their renegotiation of existing mortgages, the city would consider taking foreclosed properties by eminent domain.

Richmond did not intend to become the owner of these homes. Rather, it would oversee assessments of market value and then turn over the homes to financial partners willing to issue new, lower-cost mortgages to homeowners. But the tactic has since been embroiled in litigation by banks opposed to the idea. Consequently, no foreclosed homes have yet been taken by eminent domain — in Richmond or anywhere else.

The federal government, banks and trade groups like the Mortgage Bankers Association allege that the use of eminent domain to take homes violates the rights of homeowners and deprives investors of properties' fair market value. (Neither Bank of America nor the Mortgage Bankers Association wished to comment on this story.)

In an August 2013 memorandum, the Federal Housing Finance Agency stated that “the use of eminent domain to restructure existing financial contracts … presents a clear threat to the safe and sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.” It vowed to pursue legal challenges and “take such other actions as may be appropriate to respond to market uncertainty or increased costs created by any movement to put in place such programs.”

Nevertheless, Irvington officials hope to take and re-mortgage at least 500 to 1,000 of the 1,800 homes that have been foreclosed on during the housing crisis. During the worst of the foreclosure epidemic in 2009, Essex County — which includes Newark and Irvington — had the region’s highest concentration of foreclosed homes.

Irvington’s plan would target foreclosures linked to “private-label securities” (PLS), a high-risk class of mortgage-backed securities. Homeowners whose mortgages form the basis of PLS transactions often do not know which companies own or have the power to make decisions about their mortgages.

“These days, mortgages are cut up and sliced up," said Udi Offer, executive director of the ACLU of New Jersey, a supporter of the Irvington plan. "There are so many owners that it’s impossible to get everyone in a room about principal reduction.”

This is why, supporters say, so many cities — including San Francisco, Oakland, Pomona, Sacramento, Newark and New York City — are contemplating an approach to eminent domain that resembles Irvington's. The legal basis of using the doctrine is “crystal clear,” said Anika Singh Lemar, visiting clinical professor at Yale Law School, but “the tougher question is whether it’s a public use. There has to be an inquiry about whether, in a particular neighborhood, amelioration of blight would qualify.” In places like Irvington, Newark and Detroit, residents have seen a correlation between mass foreclosures and crime, drugs and fires.

Questions of reach and efficacy also remain. The eminent domain proposals to date would not cover all foreclosed homes, leaving some needy homeowners without recourse. In Irvington, for example, only about 10 percent of mortgages would be eligible based on the criteria set by potential financing institutions.

“The right way to use these sorts of programs is to buy mortgages in low- and middle-income programs that are at risk of being blighted, but if you have a profit-making motive, you won’t necessarily pick up those loans,” Singh Lemar said. Re-mortgaging via eminent domain, she said, is akin to yet much more complicated than the Rolling Jubilee debt-cancellation project of Occupy Wall Street, which has purchased and “abolished” nearly $15 million of consumer debt.

From credit cards to home loans, banks have targeted low-income people of color for toxic products, according to the non-profit group New Jersey Communities United. In Irvington, whose population is 85 percent African American, consumer issues resonate in racial-justice terms.

“They know we’re poor, and they’re taking advantage of us,” said McQueen, the Irvington resident who lives with her elderly mother. “The neighborhood we live in, nobody gives a damn because it’s black, Spanish, Haitian and Jamaican. They put us in situations where, at the time, it’s presentable, but when we go to talk to them, they aren’t willing to help.”

In a few weeks’ time — should Irvington find the right financial partners and escape a federal lawsuit — McQueen may get some help from her township instead.

Originally published by Al Jazeera America

Article Tabs

Activists dangling by ropes from the city's tallest bridge, and kayakers on the water below, blocked the icebreaker from heading to the Arctic for a drill operation.

drone warfare, drone attacks, drone industry, BAE Systems, Booz Allen Hamilton, Blackwater, Zel Technologies, Air Force Special Operations Command, AFSOC

America's overstretched military has hired hundreds of private-sector contractors to analyze top-secret video feeds and help track suspected terrorist leaders – a secretive industry worth hundreds of millions of dollars.

Yanis Varoufakis, Syriza, Troika, Greek debt crisis, Greek bailout, Grexit, Bank for International Settlements, bank liquidity, parallel liquidity, alternative currencies

"Politicians and parties whom the electorate condemned for their efforts to turn Greece into a protectorate are now persecuting me. I wear their accusations as badges of honor."

tar sands, tar sands bikeride, carbon emissions, bitumen, The Road to Athabasca, Trans Mountain Pipeline

Through discovery of place, through story, and through personal connection with people along the way, we are journeying 1,100 miles to the tar sands of Alberta – and are asking for your support in our venture.

non-violent drug offenses, Million Dollar Blocks

"I tell you what, I wish instead of spending so much money on [incarcerating people], they'd come fill some of these crater holes behind my house."

bank bailouts, fraudulent bank practices, mortgage backed securities, illegal foreclosures, Lanny Breuer, Eric Holder, FDIC, securitized loans, due process, whistleblowers, robosigning, mortgage fraud, revolving door

"The system is largely gamed, broken and corrupted by money, influence peddling and a revolving door."

Posted 6 days 10 hours ago
Black Lives Matter, pepper spray cops, Cleveland police incidents, police brutality, police violence, Ferguson protests, Baltimore protests

The incident occurred Sunday during protests against the arrest of a 14-year-old.

Posted 5 days 10 hours ago
Frackanpada, anti-fracking movement, fracking bans, anti-fracking camp, fracking resistance, Fracking Ez, Basque anti-fracking movement

“This is the first time fracking activists have got together on this scale internationally – from Kurdistan to Brazil, from Ukraine to Portugal and Algeria," says Catriona of Ireland, who attended the recent Frackanpada.

Posted 3 days 9 hours ago

Being sick and having nowhere to turn is terrorizing far too many Americans – as medical fraud, huge price markups and pharmaceutical copyright laws are contributing to growing illnesses and early death.

Posted 4 days 10 hours ago
Black Lives Matter, racial injustice, economic injustice, Tia Oso, Patrisse Cullors, white supremacy, Ku Klux Klan, #BernieSoBlack

The recent Black Lives Matter protest at the Netroots Nation conference was a teachable moment for everyone – forcing progressives to pick a side as they shape next year's electoral agenda.

Posted 6 days 10 hours ago
Frackanpada, anti-fracking movement, fracking bans, anti-fracking camp, fracking resistance, Fracking Ez, Basque anti-fracking movement

“This is the first time fracking activists have got together on this scale internationally – from Kurdistan to Brazil, from Ukraine to Portugal and Algeria," says Catriona of Ireland, who attended the recent Frackanpada.

Safe and Accurate Food Labeling Act, GMO labeling, GMOs, Monsanto, Denying Americans the Right to Know Act, DARK Act, Big Food, Grocery Manufacturers Association, right to know, Just Label It, Center for Food Safety

While government officials and the food industry claim GMOs are safe, consumer advocates seeking transparency on labels argue that no one really knows the long-term impacts of genetically modified crops.

Black Lives Matter, racial injustice, economic injustice, Tia Oso, Patrisse Cullors, white supremacy, Ku Klux Klan, #BernieSoBlack

The recent Black Lives Matter protest at the Netroots Nation conference was a teachable moment for everyone – forcing progressives to pick a side as they shape next year's electoral agenda.

tar sands, tar sands bikeride, carbon emissions, bitumen, The Road to Athabasca, Trans Mountain Pipeline

Through discovery of place, through story, and through personal connection with people along the way, we are journeying 1,100 miles to the tar sands of Alberta – and are asking for your support in our venture.

kayaktivists, Shell protests, Fennica, Arctic oil drilling

Dozens of kayaktivists took to the water to block Shell's Fennica ice breaker from leaving port, while a group of 13 climbers rappelled off a bridge in Portland, Oregon, with enough supplies to last days if needed.

Sign Up