Eminent domain to rescue mortgages in New Jersey city
IRVINGTON, N.J. — Irvington, N.J., is moving forward with plans to become the second municipality in the nation to use eminent domain to buy mortgages that are in foreclosure.
At a rally on Saturday, Mayor Wayne Smith said the city will perform a legal study of the proposal to use eminent domain, which has drawn forceful opposition from Wall Street, real estate groups and some in Washington, while gaining the support of a civil rights group typically opposed to the practice.
“When you hear those words, it usually has a negative connotation,” Smith said. But when used to take control of underwater mortgages, the city will “recast it so people can stay in their homes.”
The city of 53,000 that neighbors Newark has been hard-hit by foreclosures. Officials said nearly 1,800 homes here have been foreclosed on since 2008.
The city has an unemployment rate of 12.4 percent, according to the federal Bureau of Labor Statistics.
Richmond, Calif., announced plans to use eminent domain to help underwater homeowners this year, and a lawsuit challenging the practice was dismissed by a California district court judge in September. Richmond has not yet used eminent domain.
Smith said Irvington's plan would focus on so-called private label security mortgages, or ones that are not backed by the federal government.
The city will try to avoid being sued through “friendly condemnation,” which offers incentives to the mortgage owners if they agree to avoid litigation, Smith said.
The city needs a third party to come in and actually buy the mortgages, the mayor noted.
According to Cornell University law professor Robert C. Hockett, eminent domain is one of the few tools available to take over and write down an underwater mortgage because it gives municipalities the power to circumvent mortgage contracts, acquire loans from bondholders, write them down and give them back to the bondholders.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Study: At least 786 child abuse victims died despite being on protective services’ radar
- U.S., Cuba patching torn relations with historic accord
- $1.5B more a year — from fees tacked onto phone bills — earmarked for faster Internet
- Congress’ legacy: Way worse than ‘do-nothing’ one of 1947-48
- Fracking essentially banned in N.Y.
- Republican lawmakers vow to block confirmation of any potential ambassador to Cuba
- Castle doctrine doesn’t hold up in Montana murder case
- End ‘mindless’ military spending caps, Aerospace Industries Association says
- Warren’s hangups over trade agenda threaten party ties
- Lifting limits on Cuba a boon for U.S.
- Use of U.S. steel to fix Alaska terminal causes rift with Canada