Tag Archive: foreclosures

Our Unemployment, Economy and Zombie Foreclosures

With Governor Christie’s Budget Address only two weeks away, he has appointed Dr. James Wooster as New Jersey’s new chief economist. This appointment follows years of over-estimating state revenue and economic growth. In the wake of a $1 billion [revenue] miss last year, Christie pointed the finger directly at economists. It remains unclear whether the fault lay with his chief economist or whether Christie insisted on over-estimating in order to include items he wanted such as an income tax reduction. For his new budget, fraught with Pen/Ben and transportation essentials, Christie will need all the help he can get. Below are some current data points.

  • Unemployment: U. S. unemployment is now 5.7%, whereas NJ is 6.2 % and higher than contiguous states: DE (5.4%), NY (5.8%) and PA (4.8%). Hard-hit Atlantic City Area has unemployment at 14.1% with nonfarm employment dropping by 10,000 between July and December.

  • Foreclosures: RealtyTrak in a Feb 5 report found “One in four U. S. foreclosures are “zombies” – vacated by the homeowner but not yet repossessed by foreclosing lender… Among U. S. metro areas Atlantic City and Trenton had the biggest year to year increase in zombies… Zombie foreclosures increased 109 percent from a year ago in New Jersey, and the state posted the second highest total of any state.”

  • Economy: The Philadelphia Federal Reserve Bank district includes Southern NJ. It reports that “Overall this area’s economic activity as measured by the coincident index has increased 2.3 percent over the past 12 months, whereas PA has increased 5.0% and DE by 4.7%. NJ is also below the national average of 3.5%.” The NY Federal Reserve which includes Northern New Jersey reports that here, “Activity is now up more than 2 percent over the past twelve months – the strongest year-over-year growth in the state since 2005. Nevertheless, with New Jersey’s economy still an estimated 4 percent below its pre-recession (2008) peak, sustained growth in activity will be needed for some time before the state fully recovers.” In comparison NY State is better off: “The current level of activity in the state is still about 3 percent below its pre-recession (2008) peak.”

  • New Jersey’s Youngest Outcasts

    “There used to be homeless prevention programs where emergency money was provided to families who lost their jobs or didn’t have jobs to keep them in their homes. This administration hasn’t refunded them, renewed them or refreshed them.”

    – NJ Citizen Action Executive Director Phyllis Salowe-Kaye

    Our state has traditionally done a good job in coping with child homelessness. Such is reflected in our composite ranking of #5 among other states from the November Report Card on Child Homelessness issued by the National Center on Family Homelessness. Data from federal and other sources, however, tend to lag so the most recent information in the report covers 2012-2013 when we had 16,982 homeless children, substantially up from 10,986 in 2010-2011. Christie administration budget cuts reflected in the comment above provide reason to suspect that matters may not have improved.

    The problem in our state became serious after the Great Recession as the number of foreclosures started to increase, and it grew more severe following Sandy. While nationally the worst of the foreclosure crisis has passed, NJ leads the nation in the rate of foreclosures started during the third quarter. As a result “Thousands of children are being shuffled from one school to another because they don’t have a permanent place in which to live.” Then the devastation of Hurricane Sandy in 2012, as reported by First Focus Campaign for Children, contributed to a record number of homeless children in New Jersey that academic year, with nearly 8,700 students temporarily living in shelters, motels, or doubling up with family and friends.

    The Report Card on Child Homelessness (Page 53) notes NJ’s problem areas:

    *15% of children are in poverty.

    * 5.1% are without health insurance.

    * High cost of housing: $24.84/hr is needed for a 2-bedroom apartment and 32% of households are paying more than 50% of income for rent.

    * No State planning effort that includes children and families.

    Governor Christie has acted like Scrooge did toward children with his state budget and has fought against the key recommendation of the national center: to provide more safe and affordable housing. For additional recommendations, go here, starting on page 84.

    Our Unemployment: A Sow’s Ear Not A Silk Purse

    Our governor yesterday crowed over the fact that New Jersey unemployment decreased in April from 9.0% to 8.7%. However, NJ remains unchanged from last month in having the 7th highest unemployment rate among all states. Should we be boasting that 43 other states are doing better than us?  Not an enviable position.

    Our April level of 8.7% is 1.2% above the national level of 7.5%. Furthermore our rate compares unfavorably to Connecticut: 8.0%, Delaware: 7.2%, New York: 7.8% and Pennsylvania: 7.6%. So regionally we have the highest unemployment and nationally there are only 6 states worse off than us. Not much to write home about. And not much of a basis for an incumbent governor to bolster his campaign, although we know he is famous for turning a sow’s ear into a silk purse.

    Other facts to ponder:

  •  “Scheduled foreclosure auctions in New Jersey soared 91 percent last month –  in contrast with the national picture, where foreclosure filings in April fell 23 percent.” (NJ Real Estate Reporter)  

  •  “New Jersey home prices are on the rise for the second consecutive quarter as a result of purchase demand and tight inventory levels. These two factors tend to make homes less affordable.” (Housingwire)

  • “Our Indexes of Coincident Economic Indicators for March show economic activity grew moderately in New Jersey and a bit more strongly in New York City and especially in New York State.” (NY Federal Reserve)

  • “Net property taxes in New Jersey rose 18.6 percent in Gov. Chris Christie’s first three years in office, compared to just 6 percent in Democratic Gov. Jon Corzine’s last three years in office.”(NJ Spotlight)

    A further thought on priorities: The governor continues to pursue his quest of income tax reduction yet his recent bond prospectus reveals uncertainty as to whether the State will be able to meet its future pension obligations. Yes, we probably can afford to decrease our income taxes based on property taxes paid, but only if there is additional revenue from a millionaire’s surcharge. As the matter remains now the governor is happy to sacrifice the state’s future ability to pay into the pension plan in exchange for a tax reduction in his election year.  

  • EVENT: American Dream House Meeting

    Saturday, July 16, 2011 at 2:00pm
    near Main & Moore Streets in Hackettstown, NJ

    RSVP required:
    http://civic.moveon.org/event/events/event.html?event_id=117273

    Michele Bachmann says we can reduce unemployment by eliminating the minimum wage. Is that the kind of economic “recovery” we want—$4 and $5 and $6 per hour jobs? Van Jones is absolutely right. Too many of us are already sacrificing plenty. Too many of us are already paying for Wall Street’s recklessness with our personal austerities and anxieties. The Tea Party’s solution is to discredit our ideals and dismantle our government. But we can do better. We can build a movement to make OUR democracy work for OUR American Dreams. Let’s take the first step together by meeting on July 16th to get acquainted and share ideas.

    A Little Helpful Advice to our Senators

    President Obama just announced he will veto the H.R. 3808, the Interstate Recognition of Notarizations Act of 2010. Thank goodness.

    Everyone who’s bought a house has seen the careful documentation involved. The scandal that banks proceeded on foreclosures without proper evidence has been steadily rising to national prominence as they lose court cases. Senator Menendez recently tweeted a link to his outraged call on behalf of all of us:

    A key lawmaker is demanding that more than 100 mortgage companies determine whether foreclosure documents they approved contain errors and reveal their findings.

    Sen. Robert Menendez, D.-N.J., says he sent letters to three banks that have halted foreclosures in 23 states after evidence surfaced that their employees or outside lawyers signed documents without reading them.

    Even his liberal critics applauded. Unfortunately, back in the real world, last week the Senate passed — by voice vote! — H.R. 3808 making it easier to use such documents :

    The House passed the bill in April, and its brisk journey through the Senate has drawn scant attention, Reuters  reports. If signed into law, it would require courts to accept certain documents that have been notarized out of state, streamlining foreclosure proceedings and stripping homeowners of one legal method of challenging a foreclosure.

    The bill of course is a Republican one which plainly contradicts Menendez’s rhetoric:

    The law, the “Interstate Recognition of Notarizations Act,” requires all federal and state courts to recognize notarizations made in other states.

    The law specifically includes “electronic” notarizations stamped en masse by computers.

    It seems many states were suspicious of electronic notarizations coming out of Alabama. Forcing them to accept the suspicious documents was literally the motivation of the original author, Robert Aderholt, previously best known for his work on a constitutional amendment on marriage.

    The bottom line is that our senators sit and watch Republicans hold up every worthwhile legislation Democrats propose, even completely uncontroversial nominees, and then happily pass a conservative bill (first introduced in 2006) during a crisis by bypassing the proper committee. It’s not even worded well according to lawyers: What does “recognize” even mean?

    So, my helpful advice is don’t pass Republican laws without reading them. Actually, don’t trust your fellow Democrats either. We’re lucky President Obama bailed out the Democrats by vetoing the bill.

    Is it possible that Senator Menendez finally gets it? Who’s next?

    When Senator Robert Menendez was being chosen by then Governor-elect Jon Corzine to replace him in the Senate, I was one of the most vocal opponents of the decision on this site and I regularly implored some of his former colleagues in the House as well as other Democrats to challenge him in the June 2006 primary election.

    Aside from his being a major player in the most corrupt political machine in the state, there were two votes amongst the many bad votes that he cast during his congressional career that I felt should disqualify him from being given the opportunity to represent the entire state in the United States Senate.  The first was his 1996 vote in favor of the Defense of Marriage Act.  The second was his 2005 vote in favor of the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it far more difficult for people to protect themselves from their creditors through bankruptcy.

    While it remains to be seen if he will ever have the opportunity to redeem himself for supporting DOMA, it appears as if he may be willing to stop feeding at the banking lobby’s trough long enough to take the right position on a foreclosure moratorium as the issue heats up and we learn more about shortcuts being taken in the foreclosure process by some of the biggest lenders in the country, most if not all of whom were beneficiaries of taxpayer-funded bailouts.

    NJ ranked 9th in # of delinquent home loans at 15%

    Recently released numbers show just how much trouble people are having with their homes. Though we’re 9th overall, it looks like we have the 6th most serious delinquencies, meaning they are greater than 90 days behind and in foreclosure. We have a 15% total delinquency rate. Here’s a graph that illustrates things, click to enlarge:

    Check out this analysis:

    This highlights a couple more points that Brinkmann made this morning: 1) the largest category of delinquent loans are fixed rate prime loans, and 2) this is not just a “sand state” problem. Brinkmann argued the foreclosure crisis is now being driven by economic problems as opposed to the bursting of the housing price bubble – and this is showing up in prime loans and all states. Although Florida and Nevada are very high, notice that the blue bar (new delinquencies) are higher in many other states.

    It’s tough for many people out there. And these numbers don’t eveb take into account the people who are just avoiding foreclosure or those under water whose homes are worth substantially less than the amount owed on the mortgage.  

    Urging more loan modifications to prevent foreclosures

    Senator Menendez sent a letter last week to the CEOs of 20 major mortgage companies raising concerns about the rate of participation in and cooperation with the program meant to help struggling homeowners modify the terms of their mortgages. The Senator urged the mortgage companies to review and revise their loan modification efforts to help achieve the goals of the program.

    “Our nation’s housing crisis is the root of the global economic crisis that we are faced with. Preventing foreclosures helps keep families in their homes, helps the surrounding communities maintain property values and helps lift the economy, which are results that I believe we can all support,” wrote Menendez. “I fully expect you to review your company’s policies and procedures regarding loan modifications to find a balanced approach that not only ensures the financial viability of your company, but also achieves the goal of the program, which is to reduce consumers’ foreclosures on their mortgages.  I look forward to hearing the steps your company is taking to achieve more loan modifications.”

    Menendez helped chair a Banking Committee hearing focusing on preventing foreclosures at which representatives of the U.S. Department of Treasury, the U.S. Department of Housing and Urban Development and representatives from mortgage lenders and consumer groups testified. A Wall Street Journal article says that Senators blasted the slow progress of foreclosure prevention efforts:

    Under questioning from Sen. Bob Menendez, D-N.J., Allison estimated the administration could achieve 3 million to 4 million modifications by the end of 2012, a pace of around 20,000 a week.

    “In the last few weeks, we’ve actually exceeded that number,” he said.

    But there are also many scams that are going on, including ones like the Attorney General tried to break up last Wednesday:

    State Attorney General Anne Milgram announced today two separate lawsuits charging 10 defendants with mortgage-related fraud. According to the lawsuits, filed on Friday, the companies promised to help modify mortgages for people struggling to keep their homes. But instead of providing assistance, they pocketed the fees paid by homeowners.

    “It is some of the most egregious conduct we’ve seem,” Milgram said. “They’re trying to profit off someone’s misery.”

    These programs have to be closely monitored because you have people that are desperate for hope to make their situation better, being taken by those just looking to prey on the vulnerable. It’s a difficult situation as you have some people looking to give more hope, while others are praying on that to cause more heartache.

    NJ Foreclosures decline in February

    From NJbiz:

    The February report shows 601 new foreclosures were scheduled for auction last month, down from 783 foreclosures scheduled for auction in the state in January. In February 2008, some 793 foreclosures went up for auction, according to PropertyShark, which provides reports on foreclosures and other property listings.

    NJFeb09main_chart_resize

    But not all parts of the state are faring the same in this housing market:

    “Areas that have lower economic status are going to get hit worse,” Staniford said. Essex County had the highest number of new foreclosures up for auction last month; cities with the most new foreclosures included Newark, with 37; Paterson, with 29; and 24 for both Trenton and Elizabeth.

    And the CEO of PropertyShark.com doesn’t think we’re on the right track:

    Staniford said White House policies are convincing banks to ease their stance on foreclosures to negotiate more with homeowners, but “my belief is the government action is prolonging the problem, rather than solving the problem.”

    If the economy does not turn around as hoped and substantial layoffs continue, Staniford said there is little more the government can do. “If someone loses their job and becomes incapable of paying their mortgage, they are going to have to sell or go into foreclosure,” he said.

    That’s exactly why they have taken action to stabilize the economy as a whole.  The lack of government action allowed the problem to grow into the mess we have today. People knew what was going on, but no one stepped in to do anything about it. Every domino that falls triggers the next one. If people lose their job, their home gets added to the list of things they can’t afford.  That doesn’t mean you continue the policy of standing by and doing nothing.