Murphy Proposes Aggressive Program to Combat Foreclosure by Making Wall Street Pay for Houses Through Settlement Funds

State Would Purchase Foreclosed Homes & Repurpose As Affordable Housing

Newark — Phil Murphy today proposed making Wall Street pay for the purchase of foreclosed homes and repurposing them as affordable housing by utilizing millions of dollars in federal mortgage settlement funds saying, “Wall Street created the foreclosure crisis, they need to be held responsible for fixing it.”

Murphy said he would aggressively pursue the state’s fair share of Wall Street mortgage settlement funds to launch a program in which the state would purchase foreclosed homes and partner with qualified nonprofits to repurpose them as affordable housing.

He said the program could make significant progress in ending New Jersey’s foreclosure crisis, especially in disproportionately affected counties. He noted that Atlantic, Camden, and Sussex counties all have in excess of three percent of all homes in some state of foreclosure; Camden, Essex, and Ocean counties each have more than 5,000 such homes.

“Making Wall Street pay with the billions they gave up for causing the housing crash would not only ensure fairness for New Jersey’s families, but be a measure of justice for their role in creating this crisis that has left our state pockmarked with empty homes,” said Murphy. Murphy added that he was, “mystified that Governor Christie had failed to fight for New Jersey’s share of the funds.”

Murphy noted that $7.4 billion that Wall Street banks are required to provide for consumer relief as part of mortgage claim settlements made with the US Department of Justice is still unallocated. As New Jersey has 9 percent of the nation’s foreclosed houses, he said the state should receive $670 million. Murphy faulted Governor Christie for not aggressively seeking New Jersey’s fair share — the state has received only $16.5 million of the $920 million in consumer relief Citi has allocated to date, for example.

“With smart investments, we can create thousands of units of much-needed affordable housing without building a single new building,” said Murphy.

In addition, Murphy proposed the following ways to further tackle foreclosures:

  • Using the public bank to expand affordable housing by providing lines of credit to affordable housing non-profits.
  • Establishing a state Consumer Financial Protection Bureau to crack down on foreclosure-assistance scams.
  • Requiring banks or other creditors to provide maintenance and pay property taxes on foreclosed properties.

In 2016, New Jersey had the highest foreclosure rate in the nation, with 1.9% of housing units in some stage of foreclosure, nearly triple the national rate of 0.7%. The Atlantic City metropolitan area, which constitutes Atlantic County, had a foreclosure rate of 3.4% — the highest of any metropolitan area in the nation.