Wednesday, October 15, 2008

Foreclosure Response Plan

One out of 536 properties in New Jersey was at some state in the foreclosure process in August. New Jersey ranked 11th in the states for foreclosure activity in August. Now NJ is receiving federal emergency funds to help neighborhoods that have been hit by the foreclosure crisis. The funds are not for stopping or hindering foreclosures, rather for helping with the properties after the foreclosure has hit. So after this community has been hit, the feds are picking up the pieces. An article in the Asbury Park Press titled NJ mapping $52M foreclosure response plan describes the issues. Lets take a look -

State officials sought and got advice from housing and community development groups Tuesday on how New Jersey should distribute $51.5 million in federal emergency funds to help neighborhoods shellshocked by the foreclosure crisis.

The state and its partnering organizations can use the federal money to buy abandoned or foreclosed homes; demolish, redevelop or rehabilitate properties; offer down payment and closing cost assistance to home buyers; and convert properties to affordable housing. All projects must benefit low- and moderate-income people.

The program will provide $3.92 billion in direct funding to all 50 states and more than 250 local cities and counties.

"This $51 million is a drop in the bucket compared to the problems we have in New Jersey," said E. Michael Taylor, director of Essex County's housing and community development division. "Our foreclosure problem in New Jersey right now is primarily an urban issue, but, by this time next year, it will be a deep suburban issue."

Aside from the state, five local governments are getting between $2 million and $3.5 million in federal funds — Bergen County, Jersey City, Newark, Paterson and Union County.
The money will not be used to keep people in their homes but to fix up foreclosed properties and find new occupants for this. Hopefully this combined with the new Foreclosure Trust Fund will impede the downward spiral of foreclosures.

As foreclosures hit an area they drive down property values in the surrounding areas, thereby increasing the foreclosure rates. People are left with negative equity (underwater) and can not refinance. And the hurdles that people need to jump through for Hope Now seem to just get higher and higher.

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