Title
Dept/ Agency: Offices of Municipal Council/City Clerk
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Supporting the use of eminent domain
Purpose: Calling for an investigation of the use of eminent domain as a municipal tool stem the tide of housing foreclosures for community stabilization
Additional Information:
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Whereas, WHEREAS the economic housing and mortgage crisis caused by the big Wall Street banks has devastated our communities: Nine million families have lost their homes to foreclosure; nine million Americans have lost their jobs; 13 million families now owe more on their mortgages than their homes are worth; and state and local governments that have seen their property and sales tax receipts plummet are facing crippling budget crises;
WHEREAS foreclosures harm all homeowners and erode the property tax base: The foreclosure crisis has caused a ripple effect where each new foreclosure brings another distressed property on the market, pushing prices lower, and harming the value of all homes within a neighborhood;
WHEREAS homes in foreclosure experience a 22% decline in value on average;
WHEREAS declining home values increase municipal budget deficits, erode the tax base placing an undue burden on property owners, and force cuts to essential local services and jobs that support communities;
WHEREAS resetting mortgages on underwater homes to fair market value to fix the housing crisis is critical to our economic recovery and creating jobs: The overhang of underwater mortgage debt is one of the primary drags on economic recovery. Resetting mortgages on underwater homes to fair market value would reduce foreclosures and stabilize the real estate market to create revenue and jobs in our city;
WHEREAS underwater mortgages are at significantly greater risk of going into foreclosure: Research shows that homeowners who are severely underwater on their mortgages are 150% to 200% more likely to default on their mortgages;
WHEREAS the City of Newark, New Jersey has an interest in reducing the number of foreclosures within the City to keep families in their homes and preserve the community and tax base; and the City has a responsibility to promote policies that benefit the people who live and work in our City;
WHEREAS it is in the public good and in the public interest for the City to keep families in their homes and preserve the community and tax base;
WHEREAS none of the foreclosure prevention efforts that have been implemented thus far at the local, state, or federal levels have adequately addressed the crisis;
WHEREAS cities and towns elsewhere in the country have undertaken local programs to reset underwater mortgages by acquiring certain underwater mortgages for fair market value for the purpose of restructuring and modifying those loans by reducing the loan principal;
WHEREAS such programs can help prevent foreclosures and stabilize the housing market in communities where they are implemented;
THEREFORE BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, NEW JERSEY THAT:
In order to protect the public good and the public's interest in having a stable community the City shall proceed to investigate the acquisition of underwater private label security loans whose values can be raised by writing down the principal, either through purchase or the use of eminent domain, if necessary. The purpose of this acquisition is to restructure these loans for the benefit of the borrower, the community, and the City as a whole. We instruct staff of the Department of Economic and Housing Development to issue a request for proposals within 30 days of the passage of this resolution for a partner that will provide the funding for this project.
STATEMENT
This resolution calls for an investigation of the use of eminent domain to establish a process through which the City of Newark may attempt to assist home owners that have mortgage loans that are greater than the value of their homes.