Thu 5 Jun 2008
From the Courier Post Online:
State moves to help those in danger of foreclosure
An Assembly panel released a measure today that would create a roughly $30 million fund aimed at helping those facing foreclosure because of the problems in the subprime mortgage market.
“The subprime mortgage foreclosure crisis is real. It’s happening everywhere, and it demands your immediate attention,” Staci Berger, of the Community Development Network of New Jersey, told members of the Assembly Housing and Local Government Committee.
The committee, along party lines, voted 4-2 to release a measure that would levy a $2,000 fee on lenders every time they initiate a foreclosure. The fees, expected to generate between $27 million and $33 million per year, would be placed in a trust fund for mortgage counseling and emergency loans.
“New Jersey has a responsibility to take action now to protect homeowners who are at risk of losing the roofs over their heads,” Assembly Majority Leader Bonnie Watson Coleman, D-Mercer, who sponsors the measure, said in a prepared statement. “The housing bubble has burst, and we must do all we can to ensure New Jersey homeowners swept up in the flood at foreclosures can keep their heads above water.”
The only objections voiced at the hearing were from a dispute over what services struggling homeowners need. That debate split the advocates representing ther interests of the 13,500 to 16,500 homeowners projected to lose their homes this year.
“The need is more legal representation,” said Margaret Lambe Jurow, of Legal Services of New Jersey’s Anti-Predatory Lending Project. “… The loan product itself is defective. When we had lead toys on our shelf, we took them off and we removed them. But when we have these loan products here, the answer isn’t to negotiate a better deal that could have a pay out over time. It is to go back and say what was wrong with the product and to litigate that product.”
…
The measure would also require creditors to offer a six-month hold on foreclosure proceedings and allow borrowers to use mediation services to help in their refinancing negotiations.
Unfortunately, for those facing foreclosure, this is a whole lot of nothing. If this is funded purely by the tax, that $30 million isn’t sufficient to do much of anything. They can give that $2,000 back to each homeowner, and delay foreclosure by a month. Or, perhaps they can write 80 mortgages, but what good would that do? Maybe providing unsecured loans to bad credit individuals? We know how that business model worked out.
Use the cash for counseling? How does that work? “Deadbeat, take a second job and pay your mortgage.” Or is it more like, “You aren’t a bad person, you aren’t worthless because you’ll be a renter.”
At worst, say goodbye to easy money as lenders leave the state in droves. This isn’t the first time legislators took a stab at subprime, they did it once before and the lenders threatened to boycott the state. They rescinded the legislation in short order (after a few palms were greased, of course).
Lastly, be sure to thank your legislators for increasing the cost of a mortgage in New Jersey. Someone has to pay that $2,000 tax and the costs associated with 6 months forbearance.
Now, if they play this in usual New Jersey style, they’ll take that $30 million and use it as collateral on a $600 million dollar loan, and start the New Jersey Home Construction, Lending, and Slush Co. Or even better, float a bond based on the future revenues of this new foreclosure tax (based, of course, on an ever rising foreclosure rate). Now we’re talkin!
This bill;
1. Won’t do a thing to help struggling homeowners. The banks are going to foreclose no matter what…that’s their legal right. They’re already losing tens or hundreds of thousands anyhow.
2. Will provide more disincentive for businesses to not do business in this state.
Total disaster if you ask me
Maybe prices will finally drop so much that working people can finally afford a house in this state. I think they are working on a complicated way to lower property values in NJ.
From the Wall Street Journal:
Lender Lobbying Blitz Abetted Mortgage Mess
Ameriquest Pressed For Changes in Laws;
A Battle in New Jersey
By GLENN R. SIMPSON
December 31, 2007
…
Much of Ameriquest’s efforts took place below the national radar, at the state level. State legislatures wanted to crack down on so-called predatory lending, which refers to the use of deceptive or unfair practices in the sale of high-interest loans, often to low-income borrowers who can’t afford them. In New Jersey, for example, lawmakers passed a strong predatory-lending law in 2003 that made it difficult for Ameriquest to continue doing business there.
…
Problems were also developing for the industry in New Jersey. The state Assembly there passed a similar law against predatory lending, the Home Ownership Security Act. It too contained a tangible-net-benefit rule, but it didn’t provide much guidance on how the standard would be applied. “The New Jersey law makes it impossible for anyone to be in compliance,” Mr. Bass, the Ameriquest lawyer, complained at an industry conference.
In October 2002, Ameriquest and Mr. Andrews’s lobbying firm contributed $4,500 to five New Jersey state senators, state campaign reports indicate. The American Financial Services Association, a subprime industry group that included Ameriquest, predicted the law would cause lenders to abandon the state. Nevertheless, in the spring of 2003, the bill passed the state Senate and was signed into law.
At that point, opponents of the new law got some help. Just as it had done in Georgia, Standard & Poor’s said it wouldn’t rate some securities containing loans from the state. In addition, federal banking regulators issued a series of regulatory orders banning states from applying state consumer-protection rules to federally chartered banks and thrifts, part of a turf battle between federal and state regulators. That put pressure on states to soften predatory-lending rules so federally chartered banks didn’t have an advantage over state-chartered ones.
The subprime industry set to work trying to roll back the New Jersey law. The National Home Equity Mortgage Association, one of the subprime groups run by Mr. Andrews, released a survey predicting that the law would reduce mortgages in New Jersey by $4 billion.
Ameriquest and Mr. Andrews’s lobbying firm began handing out campaign contributions. Among the recipients were John Adler and Gerald Cardinale, two state senators who had voted for the new law. In October 2003, Mr. Cardinale, a Republican, received a $2,200 donation from Ameriquest, according to state election records. In November 2003, Mr. Adler, a Democrat, received $1,200 from the lobbying firm, the records indicate. In early December, the two senators introduced a bill to make changes sought by the industry.
…
That December, Neil Cohen, a state assemblyman who had voted for the new law, received a $500 donation from the lobbying firm, state records show. The Assembly’s Financial Institutions Committee, which was headed by Mr. Cohen, offered its own legislation to soften the lending law. Mr. Cohen couldn’t be reached for comment.
In 2004, as debate over the predatory-lending law dragged on, Ameriquest and Mr. Andrews’s lobbying firm together donated an additional $3,200 to Mr. Cohen, $1,100 to Mr. Cardinale and $1,300 to Mr. Adler, according to state records. Ameriquest gave $10,000 to the Democratic Party in the Assembly, $10,000 to Democrats in the Senate, and $7,000 to Senate Republicans, the records indicate.
Mr. Andrews’s wife, Lisa, then head of government affairs at Ameriquest, was also focused on New Jersey. On the Web site of her Washington public-relations firm, she says that she “built a coalition of mortgage brokers, mortgage bankers, appraisers, title companies, and others involved in home mortgage lending to create a grass-roots lobbying campaign that produced 7,000 emails and faxes to state policymakers in a six-week time frame.”
…
In June 2004, New Jersey’s Assembly and Senate unanimously passed bills that rolled back parts of the earlier law, including the tangible-net-benefit rule. Mr. Bass, the Ameriquest lawyer, announced that the company would “be offering a full range of loans in New Jersey.” Thousands of New Jersey homeowners subsequently refinanced existing mortgages or took out new loans with Ameriquest before the subprime market tanked. Many of those loans are now in foreclosure.
so, what happens when subprime carries over into so called prime?
SAS
I still think if one is staring down the barrel of foreclosure…. just stop paying, and start putting that money into yout pocket.
only the sheriff can kick you out, and the banks can’t cancel utilities of that nature.
so, just live mortgage free for as long as you can.
your credit is shit anyways, you have nothing to lose and you may find yourself living in that house longet than you thought.
Last thing a bank wants is a toally empty, forclosed house.
you have nothing to loose, might as well get off the bankers treadmill.
SAS
I happened to check out Zillow this evening, and I noticed that 2 places I had been following lost ~10% in value the last 30 days.
I know it’s zillow, but I thought it was interesting.
kettle1,
sounds like you are having an “awakening”, apply your eyes opening savy to other areas, besides just RE (i.e politics, economics), and you will see how really long & deep this rabbit hole goes.
kudos!
SAS
btw..
are there any wtiters or editors on the blogs, I am writing a book, could use some help, if anyone is looken to pickup a gig, let me know.
SAS
SAS,
I have indeed glimpsed the rabbit hole. While i have not seen to the depths that you may have, i am well aware that the rabbit hole is deeper an dirtier then many would hazard to guess.
I have started to type comments related to the rabbit whole before be realized how crazy they sound if you believe that our system is not surrently setup to primarily provide bread and circus while the big dogs feast.
Did you see the hearing on oil speculation the other day? senators asked some of the “right” questions, but look who they asked? never start an investigation or hearing until you already know the outcome.
OT
but wow! for NFL fans, something is rotten in Denmark with this story.
“Steroids dealer found dead at North Texas home”
http://tinyurl.com/497dkf
SAS
SAS,
I had my awakening about 2 years ago when i decided to look into some ludicrous claims someone posted on a blog…. turns out they were not so ludicrous…. and it was down the rabbit whole for me.
I am still somewhat asimilting the world as i see it now after having taken the red pill. it is a very different world then before pulling back the curtain
#1 grim,
Won’t the lenders just pass the $2,000 onto all borrowers through higher points and interest rates?
Maybe they could take the 30 million and make anyone with a sub 700 score who wants a mortgage take a personal finance course? Learn how to balance a checkbook and budget, the wonders of compound interest, the beauty of saving in a tax deferred retirement account? Something like that I would actually support. Let NJ help break the cycle of financial illiteracy.
Oh come on SA that is no different then the DC madam committing suicide. she was just depressed.
the NFL dealer probably just fell in the shower
kettle1,
if we meet at the GTG, remind me to tell you the story of how we pulled the rug from under south korea, and created one of the largest telecommunications companies in the US.
hint… they have there name on a nice little stadium ;)
SAS
OT Mariners manager goes postal
http://video.msn.com/video.aspx?mkt=en-US&brand=foxsports&vid=0dcdf221-ffb2-4ef6-b878-20eb84db2cc5
“DC madam”
She was about to point the finger at vice president Cheney and his desire for 18yr olds, whom seem to end of missing.
(we better switch topics)
SAS
SAS,
i have family obligations that weekend and will not be able to make it. perhaps at another GTG :(
SAS,
while i am on a roll, i have also decided that the movie “The Matrix” is actually a very good metaphor for real life. Most people go about their day wotout regard for the big picture or what that picture actually is, as long as they can go about their routine undistrubed.
Then you have another world where the real power brokers/ corporate barons/ political chess masters and any others who choose to actually look around live.
They are physically in the same place but most people are completely unaware of the “real” wprld.
Sort of like fox news talking up alqeada, when the real history and creation of this ground is substantially different from the popular conception.
O.K., Kettle, I’ll see your red eyes and raise you three varicose veins.
http://www.cfr.org/publication/16389/eye_of_the_credit_storm.html?breadcrumb=%2F
Besides, private equity is increasing it’s rate of asset sales.
oops. its.
All this talk of the rabbit hole. Any of you read “Confessions of an Economic Hitman”.
Ket
“Hey patient, does the significant amount of money make the schedule easier?”
No
But buried in the center of your long post was some very fine weather.
Hard place
I’d rather stab myself in the eye with an icepick than bail out a bank. The welcome was only in respect of today’s particular spike.
sas,
Do a Google search for “Editorial Freelancers Association.”
They will let you post an ad for free. Goes out daily via email to all members - about 4,000.
1 grim
Right
The $30M is intended to prevent/defray foreclosures, and yet it won’t exist without foreclosures.
We will prevent foreclosures by spending money that we raise by taxing foreclosures.
Ridiculous.
Ket
You leave work yet?
4 Frank
Agreed that lower housing prices would be a consequence.
Jackpot!!
“In October 2003, Mr. Cardinale, a Republican, received a $2,200 donation from Ameriquest, according to state election records. In November 2003, Mr. Adler, a Democrat, received $1,200 from the lobbying firm, the records indicate. In early December, the two senators introduced a bill to make changes sought by the industry.”
Democrat = cheaper date.
9 sas
Kettle’s eyes are more wide open than most folks
Ket
“Oh come on SA that is no different then the DC madam committing suicide. she was just depressed.the NFL dealer probably just fell in the shower”
Did you just watch Cry Freedom?
18
Sas
Don’t bring up Jeff Gannon/Guckert
22 pat
Watchoo talkin’ ’bout
it’s like my very own blog!
It’s the NJRE, politics, strollers, oil, immigration, economics, conspiracy theory, baseball, gold, and patient-finally-has-15-minutes-of-alone-time-to-talk-to-himself blog!
fine.
I’m off.
Turns out I’m terrible company.
Yeah…you are ;)
Hmmm, the politicians just gave themselves a $2,000 raise for every foreclosure in NJ!
#5 grim,
I wish I had a link… someone did some research on campaign contributions to (the U.S.) Congress. It turns out that these contributions gave the best Return On Investment - better than any other use of the money - something crazy like 1400%! The People’s Representatives sell themselves cheaply.
#28 njpatient -
Sorta like tobacco taxes which (supposedly) fund anti-smoking campaigns. WTF?