Title
Dept/ Agency: Offices of Municipal Council/City Clerk
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Type of Service: Supporting Action
Purpose: Supporting an investigation regarding whether certain properties in the City of Newark should be designated as an area in need of redevelopment
Additional Information:
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WHEREAS, due in large part to the economic downturn of 2007 and certain predatory lending practices, many City of Newark home owners have experienced a significant decline in home values yet remain subject to underwater mortgages which have principal balances that exceed the current value of their home; and
WHEREAS, this situation often referred to as underwater mortgages are at significantly greater risk of going into foreclosure, with research showing that homeowners who are severely underwater on their mortgages are more likely to default on their mortgages; and
WHEREAS, resetting these mortgages to fair market value may reduce foreclosures and stabilize the real estate market to create revenue and jobs in our City; and
WHEREAS, loans held in private-label securitization trusts (the "PLS Loans") tend to be subject to pooling and servicing agreements that would require collective action by many security holders before the PLS Loans can be modified or sold out of trusts; and
WHEREAS, approximately one thousand, one hundred fifty-one 1,151) PLS Loans are located in the City of Newark (the "City"); and
WHEREAS, conducting collective action across most holders of the PLS Loans has been historically difficult; and
WHEREAS, 77% of the PLS Loans located in the City have some predatory feature in the terms of the original loan, including, but not limited to Adjustable Rate Mortgages, Balloon Mortgages, Interest Only Mortgages and Negative Amortizations; and
WHEREAS, the City has an interest in reducing the number of foreclosures withi...
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