What to do about Fort Monmouth?

Posted on December 26, 2006 by grim

From the Philly Inquirer:

A major planning effort aims at recycling Fort Monmouth

The Army will withdraw from Fort Monmouth by September 2011, ending nearly a century in which it became a major economic force in New Jersey.

Five years might seem like a long time, but the people charged with finding post-Army uses for the fort’s 1,100 acres feel they’re already racing the clock.

At stake is the future of a sprawling area that lies along one of the Jersey shore’s commercial corridors, Route 35, and touches scenic waterways.

No one expects the entire base, whose current mission includes high-tech communications work, to have new functions up and running by 2011. But Eatontown Mayor Gerry Tarantolo hopes some of the land will have a non-military use by then.

Eatontown, one of three municipalities that has territory within fort boundaries, formulated a plan years ago to redevelop a portion of the fort, where more than 400 units of military housing have been vacant since the early 1990s.
…
The fort is important to the state – its payroll for nearly 6,000 workers approaches $500 million – and its overall economic impact is estimated at $2.5 billion annually by the state Commerce, Economic Growth and Tourism Commission. That includes money spent locally by workers, and support jobs that involve about 22,000 people.

Redevelopment could provide an even larger impact, said Virginia S. Bauer, CEO and secretary of the state commission. “This is very unique, in that these 1,100 acres are just extremely well-located pieces of real estate,” said Bauer, who also is vice chair of the planning authority.

Although final decisions on what will replace the fort are years away, officials are staking hopeful claims to parts of the fort that they want to preserve.
…
The fort has 5,088 civilian employees and 467 military personnel. About 80 people, in such areas as public works and emergency services, will not be transferred. Of positions that will be continuing, 25 percent have said they will relocate and 39 percent are undecided, said fort spokesman Timothy Rider.

Posted in Economics, New Development, New Jersey Real Estate | Comments Off on What to do about Fort Monmouth?

Little progress seen in Camden

Posted on December 26, 2006 by grim

From the Courier Post Online:

Camden’s direction up in air

The hopeful and the hopeless live side by side all over Camden.

Four years after the state government took control of America’s poorest city, it’s hard to tell which way the city is going.
…
“They’re spending all this money. I ain’t seen it. Ain’t nothing happened around here,” she said as she cradled her smoke-scarred crack pipe in the palm of her hand.
…
If you stop by The Sword of the Spirit Christian Church on any given night, you might hear the immaculately dressed Rev. Willie Anderson telling his parishioners there’s no need to be ashamed of money, no reason they can’t find a life of comfort and success.
…
“All of us here thought there would have been more accomplished than this by now,” he said.

Great — and, as it turns out, unrealistic — predictions were made on July 1, 2002 when the state Legislature voted to make Camden the only city in America where the right to govern themselves has been taken away from local residents.

A state-appointed chief operating officer, with czar-like powers over every board and agency, was put in charge. Randy Primas, a former mayor, was given the $175,000-a-year job.

But turning around Camden has been like stopping a runaway freight train in its tracks. It has been harder, it is taking longer and it is taking more money and more effort than anyone anticipated.

In recent months, the effort to rebuild the city has gone off track. Primas left his job on Dec. 8 — a full year before the end of his term — as state and federal grand juries continue to investigate how some of the $175 million in state money committed to Camden’s recovery has been spent so far.

Gov. Jon S. Corzine has selected an 18-member committee to conduct a national search to replace Primas for the next five years. On Dec. 14, the governor named retired Superior Court Judge Theodore Z. Davis to run the city, on an interim basis, for the next four months.

By all accounts, the agenda for action is crowded with unfinished business. The state takeover legislation set lofty goals, and the jury is still out about whether progress has been made in the following areas:

Schools. The 17,000-student school system is mired in scandal as law enforcement officials investigate whether administrators falsified test scores and college transcripts to make it seem Camden’s students were doing better than they were. In addition, the state promised to spend $427 million to build 16 new schools but, to date, not a single new school has been built.

Redevelopment. Procedural errors by city attorneys stalled two $1 billion-dollar redevelopment plans in courts. Stiff community opposition threatens other plans.

Housing. Nonprofit groups say they want to rehabilitate hundreds of dilapidated homes, but the city won’t let them. Hundreds of homes are tied up in the redevelopment plans that are stuck in court.

Police. Ten years ago, a harshly critical state audit said the city’s police force was ineffective and improperly deployed. Union contracts require the same number of police be on the streets at all hours of the day regardless of the level of crime. A decade after the audit, Arturo Venegas was appointed to lead the police force and began making changes.

Corruption. Three of the last six mayors have been jailed on corruption charges. In July, the drumbeat of corruption continued as longtime Councilman Ali Sloan El, who called himself “the people’s champ,” pleaded guilty in federal court to taking more than $36,000 in bribes.

Posted in Economics, New Jersey Real Estate, Politics | 1 Comment

Weekend Open Discussion

Posted on December 25, 2006 by grim

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing bubble, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labelled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

This post will remain at the top of the page during the weekend, any new posts will be displayed below.

Posted in General | 187 Comments

Is transit-oriented development the answer?

Posted on December 25, 2006 by grim

From the Courier News:

Group: Mass transit can ease N.J. woes

To explain something as complicated as the statewide property tax crisis, George Hawkins needs a whiteboard.

Hawkins is the executive director of New Jersey Future, a research and advocacy group that studies the state’s development problems and possible solutions. Recently, he made a presentation for an editorial board meeting at the Courier News, in which he explained the mission of his organization: to help individuals and municipalities cope with the burden of dense development, rising property taxes, growing school populations, traffic and other problems, by raising awareness about smart growth.

Somewhere in his doodle of New Jersey, cris-crossed with highways and strip malls, Hawkins made room for more mass transit-oriented development as a long-term solution to the hefty tax bills many residents now face. Tax reform and environmental health are part of a holistic process, and in a state as crowded as New Jersey, transit-oriented land use is a big part of that process, he said.

“I believe my generation’s view of this kind of development is changing,” he said, citing the many potential long-term benefits of transit villages: lower property taxes, more manageable development and land use, a balanced job market, more affordable housing and numerous other solutions to statewide problems resulting from overdevelopment and sprawl.
…
In his pitch, Hawkins explains the complex cycle of fiscal imbalance that leads to “the ratables chase” — residential development does not pay for itself — that is, the cost of local government, services and schooling generally exceeds the revenue generated in property taxes. Thus, municipalities have an incentive to court nonresidential development — shopping centers, office parks and hotels — and discourage residential development.

These major commercial projects go to the lowest bidder, sometimes with little consideration of how the development will affect the surrounding area. This kind of development can suck people and resources out of town and city centers and divert them into a sprawling pattern, Hawkins said.

Because school funding can be the largest component of local spending, municipalities may be forced to encourage housing for seniors and singles, and zone for revenue-producing luxury houses on large, expensive lots, all to resist building housing for families.

The cumulative result of all this is a statewide housing shortage, with lots of development that may have unintended consequences from traffic to increased pollution, Hawkins said.

Posted in New Development, New Jersey Real Estate | 21 Comments

Free speech or HOA rules?

Posted on December 25, 2006 by grim

From the Trenton Times:

Homeowner free speech battle heads to court

The New Jersey Supreme Court will hear arguments in January over whether homeowners surrender some of their rights when they move into developments governed by homeowners associations.

Dissident residents of Twin Rivers, a 10,000-resident strong complex in East Windsor, claim they have the right to put up political signs and hold political rallies in the development’s common room or print whatever they please in the association’s newsletter.

The homeowners association disagrees, saying the residents must abide by the rules that they agreed to when they moved into the development.

Plaintiff Haim Bar-Akiva is pleased the case, filed in 2000, will be heard by the Supreme Court, adding, “Especially, if there will be a decision in our favor but we cannot read the judges’ minds.”

Recently, New Jersey Public Advocate Ronald K. Chen filed a friend of the court brief, noting that 1 million New Jerseyans — or 40 percent of residents — live in property governed by homeowner associations and the number of residents moving into those communities is growing.

In the brief, the public advocate sided with the dissident homeowners, asking the court to rule that the homeowners do have a constitutional right to free speech that supersedes rules imposed by the homeowners association which should be treated as a “private government.”

“As more people come under the regulatory authority of homeowners’ associations, and as those associations assert increasing control over the basic expressive and associational rights of their residents, the imperative to extend constitutional protections to these communities grows as well,” the advocate’s brief stated.

“When homeowners’ associations function as private municipal governments, and seek to restrict their residents’ fundamental rights to free expression and association, they should be subject to the constraints of the state Constitution,” it also noted.

Posted in New Jersey Real Estate | 4 Comments

Boom Over, Fundamentals Rule

Posted on December 24, 2006 by grim

From the Wall Street Journal:

New Rules for Real Estate

Battle-scarred mom-and-pop investors are still dabbling in real estate. But they are changing the rules of engagement.

During the housing boom, many individual investors went deep into debt to buy investment properties — rental homes and condos — in hopes of selling quickly. The goal: Cash in on soaring prices. They may have had little or no intention of being landlords for the long haul.

Despite the end of the speculative craze, a number of markets in the fragmented real-estate world continue to lure investors willing to adjust their expectations. One key move: As rents take off, buyers increasingly focus on multiunit rental properties instead of the single-family condos and homes that were popular during the housing boom.

Some investors are also shifting money into regions of the country where they expect prices to continue to rise, such as Texas, the Kansas City area and parts of North Carolina.

Developers are also crafting special promotions, such as guaranteed rental income for as long as five years. Deals like these are particularly common in Florida, but they are also appearing in other markets, including Philadelphia and Myrtle Beach, S.C.

Another major shift: Most investors are focusing on the fundamentals that guided the market before the housing boom, especially cash flow — the ability to actually make money from, say, rentals, rather than from quickly selling the property. They are sticking with properties that turn a profit (or at least break even) after factoring in interest payments, taxes and other expenses.

That is a change from the past few years, when speculators were willing to lose money each month in hopes of selling for a big gain.
…
Big risks remain for investors in residential property. The National Association of Realtors reported that the median price of an existing home in October was down 3.5% from a year earlier, the largest decline since the group began collecting these data in the late 1960s. And a glut of unsold homes could continue to keep prices in check.

Many investors have fled. The number of borrowers taking out mortgages to buy investment properties was off more than 70% in the third quarter from a year earlier, says First American LoanPerformance, a unit of First American Corp. Meanwhile, investors’ share of home purchases fell to 8.4% in the first nine months of this year from 9.5% a year earlier, says LoanPerformance. Five years ago, that share was less than 6%. (Figures don’t include investors who paid cash or financed their purchases by tapping the equity in their existing home.)

Some of the biggest declines in investor purchases are in once-hot markets where speculators helped drive prices to unsustainable levels. In places such as southern Florida, Phoenix, Las Vegas, San Diego and Washington, D.C., “the numbers just don’t make sense for long-term investors…unless they are able to buy at a strong discount,” says Jack McCabe, a real-estate consultant in Deerfield Beach, Fla.
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The situation is bleaker for those buying homes and condos as an investment, says Mr. Liang. “They should have very limited expectations on appreciation going forward — probably 0% to 3% annually for the next five years,” he says.

Many speculators who bought property during the boom may now be facing a tough choice. They can either lose a moderate amount of money each month while they wait for the market to rebound, or they can sell and take the pain all at once. Refinancing the mortgage could help under certain circumstances, such as when a borrower has an adjustable-rate mortgage that has reset to a higher interest rate. But for those who took out exotic mortgages with low monthly payments, refinancing may bring no relief.

Posted in Economics, National Real Estate | 1 Comment

High cost of living causing headaches

Posted on December 24, 2006 by grim

From the Asbury Park Press:

Tough road ahead

As New Jersey heads into 2007, many companies are singing a similar tune. Their sales are growing and they see opportunities ahead, but the uncertain national economy and the high cost of doing business in the Garden State discourage them from taking on new employees.

The sentiment underlies a trend economists expect to continue next year. Business owners are saddled with a host of worries, from rising energy prices to a slowing real estate market, so they are holding the line on the only expense they can control: Hiring.

“The top thing on the state’s to-do list in 2007 is to become competitive again for new job growth,” said Joseph J. Seneca, an economics professor at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy. “That’s not an easy fix.”

Seneca and his colleague, James W. Hughes, said New Jersey’s job market has been lagging the U.S. job market for nearly three years. The state is on pace to add 21,000 jobs in 2006, less than half of its new jobs in 2005.
…
t is not a strong performance when compared with the national economy. For the first 11 months of 2006, the nation’s private sector grew by 1.24 percent. New Jersey’s private sector grew by .41 percent, the Rutgers economists said.

Behind the numbers is a gloomy attitude among business owners. A survey by the New Jersey Business and Industry Association, the state’s biggest business lobby, found 51 percent expect the state’s economic conditions to deteriorate during the first half of the year, while 12 percent expect an improvement. It echoed the business sentiment during the recession from 1989 to 1992.

“It’s tougher than ever for New Jersey firms because we are a higher-cost state than a lot of other states and countries we compete against,” association President Philip Kirschner said. “That is starting to have a real negative effect.”
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The high cost of living causes headaches throughout the economy, experts said.

Patrick J. O’Keefe, chief executive officer of the New Jersey Builders Association, said that’s a big reason why building permits declined 17 percent in 2006 and why he expects another slow year in 2007.

“The price of housing . . . is beyond the reach of all but the most affluent households in New Jersey,” O’Keefe said. “As a consequence, most purchasers have withdrawn from the market. They recognize that even with interest rates being at still relatively low levels, they can’t afford to pay what the prospective sellers are demanding.”

Posted in Economics, New Jersey Real Estate | Comments Off on High cost of living causing headaches

A handful of units for Jersey City

Posted on December 24, 2006 by grim

From the Hudson Reporter:

Towers in JC, luxury lofts in UC

A significant number of new residential towers, rehabilitated factories, and redevelopment areas are already under way in formerly blighted regions of town.

For instance, the former site of the Jersey City Medical Center will see 1,200 condominiums. And an 80-acre area on the northern waterfront is under years of construction that will turn it into a new neighborhood with 10,000 residential units.

In brief, here are some of the projects in Jersey City already under construction:

Liberty Harbor North is an 80-acre community stretching from Grand Street to the Morris Canal overlooking Liberty State Park. When the project is completed in next five to 10 years, it will include 10,000 residential units and five million square feet of retail and office space. The first 215 units went on sale in October.

The Beacon, a $350 million, 1,200-unit condominium project, is being built on the site of the old Jersey City Medical Center at Baldwin Avenue and Montgomery Street. The first condos could be available for purchase in 2007.

Trump Plaza: Jersey City, a $415 million condominium project with a 55-story tower housing 445 condo units and a 50-story tower with 417 units. Construction began in September 2005 and continued into 2006, with occupancy scheduled to begin in November 2007.

Columbus Plaza, a project on Columbus Drive and Warren Street, will ultimately contain 1,150 units of housing. Phase I will be completed in early 2007, including a 35-story tower with 392 residences, a 1,120-car parking garage, 27,000 square feet of ground floor retail, eight townhouses, and a new on-site entrance to the Grove Street PATH subway station.

Grove Pointe, on Newark Avenue between Grove Street and Marin Boulevard, is a 29-story building that will contain 525 luxury residential units, 67 condominiums, and 458 rental apartments. The apartments are expected to be completed late next year.

This project will also include the revamping of a one-block section of Newark Avenue and the triangular park area at the entrance to the Grove Street PATH station.

77 Hudson St. broke ground this year. Its two 500-foot skyscrapers will be located at the corner of Hudson and Sussex Streets. One tower will hold 420 condominiums to be sold by K. Hovnanian, and the other will hold 481 apartments operated by Equity Residential.

Equity Residential is expected to rent out the apartments during the winter of 2008 and K. Hovnanian is expected to have the condos occupied during the spring of 2009.

These projects received approval in 2006 from the Planning Board:

The Metropolitan, a 67-story building, was approved in October to be built on the site of a Pep Boys Automotive store near Newport Center Mall. The 755-foot tower, when completed, will have 809 residential units with 817 parking spaces.

The Grover Cleveland and the Ulysses S. Grant were approved in December, two towers with 326 units with the same number of parking spaces, on Tenth Street. The project will be built by Newport Development Associates, with construction to start in six to nine months.

In December, the Jersey City Planning Board approved a $350-plus million, two-tower project of 52 and 46 stories respectively in Journal Square near the PATH Transportation Center that will see over 1,000 condominium units, about 150,000 square feet of retail and over 800 parking spaces. The project’s construction is to take place starting late next year.

Posted in New Development, New Jersey Real Estate | 6 Comments

’07 Outlook

Posted on December 23, 2006 by grim

From the Daily Record:

Experts expect home prices to drop in ’07

So, what’s going to happen to home prices in 2007?

Kathleen Camilli of Camilli Economics thinks they will rise by 5 percent.

Of 58 forecasters polled by BusinessWeek (Dec. 25-Jan.1), she was the most optimistic. The consensus: a decline of 1.7 percent.

The most pessimistic: Wayne Angell of Angell Economics, who predicted a drop of 15 percent. (The predictions were for the fourth quarter of this year to the fourth quarter of next year.)

Even more gloomy is the author of an article in the same issue, Peter Coy.

If history repeats itself, he writes, “It’s likely to take 15 years or more for many parts of the country to get back to their inflation-adjusted peaks.” In 2007, he believes, prices probably are going to fall further in many markets; where they rise, it will be less than the inflation rate.

His advice to homeowners: If you must sell and are having trouble, “cut the price by an extreme amount.” Advice to buyers: “Bargain hard.”

His overall advice: “… right now is not the ideal time to buy or move up, even with the recent price declines.”

Generally, BusinessWeek thinks that the economic outlook for 2007 is “pretty good.”

Posted in General, National Real Estate | 8 Comments

Where is the money coming from Corzine?

Posted on December 23, 2006 by grim

From the Asbury Park Press:

No stemming state’s debt

Gov. Corzine called it a “tremendous” day for New Jersey when he signed legislation Wednesday to borrow $270 million for stem cell research. He got the “tremendous” part right: It will contribute tremendously to the state’s debt problems.

Corzine and the Legislature really overstepped the bounds on this one, forcing future generations to pay for research that should be privately funded. And with the trouble pouring out of the University of Medicine and Dentistry of New Jersey — the corruption, mismanagement and more than 100 million wasted tax dollars — this is a particularly inopportune time for the state to further involve itself in medical research.

Can Corzine guarantee these new research facilities won’t become patronage pits? There’s scant evidence to suggest he can. The scientists who will be doing the real work at these centers should be on full alert for the arrival of “consultants” and other nondescript “professionals” for whom jobs are found, usually because they are friends, relatives or big campaign donors of politicians.

Stem cell research may provide the answers to many medical questions and the cure to serious illnesseses. But like other research, it should be conducted and funded by private firms — not by the residents of the most heavily taxed state in the country.

The scientific community is embracing the stem cell legislation. Why wouldn’t it? Now the work that should have been funded by pharmaceutical companies and research labs will be funded by taxpayer money. But the research firms should be wary of their new bedfellows: New Jersey politicians have an uncanny way of diverting money from its higher purposes. Just ask the doctors and researchers at UMDNJ.

Posted in Politics | 4 Comments

Revaluation Pains

Posted on December 22, 2006 by grim

From the News Transcript:

Impact of reval will become clear in 07

The recently completed property revaluation of 14,720 taxable properties in Manalapan resulted in 700 property owners requesting an appeal of the new assessment they received.

Manalapan Tax Assessor Sharon Hartman said informal hearings for these appeals were conducted from Nov. 1 through Nov. 30. She said a letter will be going out to each resident who appealed in order to apprise them of the final decision and the final new assessment on their property.

Hartman said any reduction in the initial assessment would be the result of officials looking at all of the properties surrounding any individual appeal and any reduction would be made for the whole neighborhood and not just the individual who appealed.

Manalapan�s last revaluation was in 1991.

Monmouth County Tax Administrator Matthew S. Clark has explained that revaluations are necessary to ensure parity among all taxpayers, meaning the tax burden is evenly distributed among 100 percent of the tax base.
…
Hartman acknowledged that the taxes paid on some properties will increase, the taxes paid on some properties will decrease and the taxes paid on some properties will remain about the same.

She said when all is said and done, it could turn out that an individual who paid between $800,000 and $1 million for a new home in the past year could see his property tax bill decrease if his home�s value had not been �raised significantly� during the revaluation process.

�The purpose of the reval is to redistribute the amount of taxes collected � to distribute them fairly,� Hartman said.

Using Hartman�s projection of Manalapan�s overall tax rate being cut in half as a result of the revaluation (from $3.69 to about $1.85 per $100 of assessed valuation), the owner of a home that was previously assessed at $200,000 and is now assessed at $500,000 would see an increase in his total property tax from $7,380 to $9,250.

The owner of a home that was previously assessed at $800,000 and is now assessed at $1 million would see a decrease in his total property tax from $29,520 to $18,500.

From the Asbury Park Press:

APPEAL A PROPERTY TAX ASSESSMENT

hinking about appealing your property tax assessment? First, experts and tax officers say, study or consult on the rules, think it through again, then decide what to do.

Mike and Betty Palermo of Webb Avenue in the Ocean Grove section of Neptune considered appealing their assessment early in 2004. Neptune had just gone through its first revaluation in 14 years, and the Palermos’ residence skyrocketed in taxable value from $135,800 to $448,000, or 330 percent, with their property taxes soaring accordingly.

“We hired a private assessor, for about $100, to come down and study our property, and to let us know how fair or unfair the township’s assessment was,” said Mike Palermo, 81. “He said if we sold the house, we would get at least what the township assessed it at. He said an appeal, therefore, would be disastrous. The tax increase is tough, but we don’t want to move. We did not appeal. We bit the bullet.”

Yehuda Shain, a Lakewood real estate broker, is also a state-certified tax assessor. He said he has assisted hundreds of people in deciding whether they should appeal.

“Most people who appeal do not succeed because they did not have the grounds to appeal,” Shain said. “Some people think that because their taxes are high, and they can not afford to pay, that they can appeal to the tax board. But such an argument carries no weight at all.”

Tax officials in Monmouth and Ocean counties agree that many people do not understand what an assessment appeal involves, and often appeal when, if they had done some preliminary research, they would not have wasted their time and money.

“Many appeals are filed that have no chance of succeeding, and the filing fee is lost,” said Matthew Clark, tax administrator for Monmouth County.

Posted in New Jersey Real Estate, Property Taxes | 20 Comments

Closing costs falling

Posted on December 22, 2006 by grim

From theday.com:

As Home Prices Fall, So Do The Closing Costs

Lately, buyers have gotten at least some relief from the skyrocketing cost of real estate. Similar relief could be coming from another less obvious, but significant, expense — namely, closing costs.
Since some closing costs are tied to the size of the mortgage, and since average mortgage amounts are flattening — along with the housing market — closing costs could be falling, too, at least in some regions.

Nationally, closing costs (also known as settlement costs) have been rising, according to a report earlier this year by Bankrate.com, which surveyed hundreds of lenders nationwide to find an average price for closing a mortgage for a newly purchased home.

According to the report, New York is the most expensive state in which to close a mortgage, with costs totaling $3,887, on average. Connecticut is sixth nationally, at $3,284, while New Jersey is 14th, at $3,158.
…
As for New Jersey, neither Lewis of Bankrate nor Gary Lehnes, president of the state’s Association of Mortgage Brokers, could explain its drop in closing costs, from fourth last year to 14th this year.

One possible explanation is that more of New Jersey’s home buyers are using title companies to oversee the mortgage settlement, rather than lawyers. Unlike New York, New Jersey does not require a buyer to use a lawyer during a real estate closing.

For New Jersey’s most affluent homeowners, one significant closing cost has risen, however, thanks to the so-called “mansion tax” enacted by the state last year. With that, buyers pay 1 percent of the total purchase price on houses that sell for $1 million or more. “Especially during the boom in 2003, 2004 and part of 2005,” Lehnes said, “we saw houses that had been selling for $800,000 go up over the $1 million level. So for those people, that can be an added expense.”

Posted in General | 17 Comments

Wouldn’t it be easier to sell the state?

Posted on December 22, 2006 by grim

From the Asbury Park Press:

New bill would allow lease of toll roads

The state may raise as much as $10 billion by leasing its toll roads, said state Sen. Raymond Lesniak, who plans to introduce a bill next month authorizing such a deal.

Lesniak said that estimate could vary by as much as $2 billion in either direction depending on issues such as required maintenance costs and the ability granted to any leaseholder to raise tolls to pay for growing expenses.

“That’s a rough estimate,” Lesniak said in an interview Wednesday. “We could use this capital as part of any long range plan.”

Gov. Corzine’s administration is studying the sale of assets such as the New Jersey Turnpike as part of a plan to reduce the state’s $30 billion debt and trim the highest-in-the-nation property taxes. Lesniak’s bill would allow the state to take bids from private companies for asset sales or leases, and require that the Legislature approve any firm selected.

Corzine, a Democrat and former chief executive officer of Goldman, Sachs & Co., said his administration wasn’t involved in drafting the Lesniak bill. The state hired UBS AG in September to make recommendations on possible asset sales; State Treasurer Bradley Abelow said yesterday the state will take some action toward an asset sale or lease within the next six months.

“We will not have the resources to fund the serious rebate program many of us want to fund unless there is debt reduction in the form of monetization,” Corzine told reporters Dec. 19. “It’s not rocket science how we are going to generate those resources.”

Lesniak’s legislation would allow the state treasurer to consider proposals from private companies to bid for a 75-year lease of the Turnpike, the Garden State Parkway and the Atlantic City Expressway, according to a draft version.

To lure bidders, Lesniak’s bill would let a private operator increase tolls each year. For cars, the toll rise could be no more than the rate of U.S. inflation; for trucks, it could be no more than the increase in U.S. gross domestic product.

Posted in Property Taxes, Risky Lending | 6 Comments

Is a lawyer really necessary?

Posted on December 21, 2006 by grim

Interesting piece by Stuart Lieberman (lawyer) on the use of lawyers to assist in real estate closings, from RealtyTimes:

Do You Really Need a Lawyer For a Real Estate Closing

Real Estate practices and procedures are all local. For example, here in New Jersey things are done differently depending on whether you are located in North Jersey or South Jersey.

In North Jersey, people usually use a real estate lawyer to assist them with their real estate transaction. For as little as $700.00 or so, a lawyer can help you with the sale of your home. Prices do vary and it costs a little more if you are buying a home.
…
My office is located in Central New Jersey and we see both practices. When lawyers are not involved, title companies do most of the work that lawyers would otherwise do.

Posted in New Jersey Real Estate | 119 Comments

“Foreclosure Factories”

Posted on December 21, 2006 by grim

From BusinessWeek:

The “Foreclosure Factories” Vise

Randy and Jennifer Rimstad of Minnetonka, Minn., refinanced their mortgage in 2004 to replace a 50-year-old furnace and pay for their youngest daughter’s wedding. In May, their interest rate jumped to 8.55% from 5.55%, pushing their monthly payment from $1,654.81 to $2,295.68, and the Rimstads buckled under an adjustable rate mortgage they say they didn’t understand and could ill afford. Then came the collection nightmare that tacked on another $700 or so in monthly payments.

On Dec. 5, Option One Mortgage Corp., a Kansas City (Mo.)-based unit of H&R Block Inc. (HRB ), foreclosed because the Rimstads owed more than $18,000 in late charges and attorney’s fees, on top of their past-due payments. After 24 years under the same roof, the Rimstads face an uncertain future. “I don’t know what will happen to us,” says Randy, 57. “We don’t have any place to go.” Option One says it can’t comment on the specific amount owed, but that it has been working with the Rimstads and will continue to “explore options toward a solution.”

Millions of other families in the U.S. could soon find themselves in the same dire straits. Some $1.2 billion in adjustable mortgages will shift to higher rates in 2006 and 2007, more than half of which are to borrowers with less-than-perfect credit, or subprime borrowers, like the Rimstads. These loans already are defaulting at unprecedented rates. Lenders are in large part responsible because they sold risky and unsuitable mortgages to unsophisticated borrowers. In some cases, of course, careless borrowers shoulder some of the blame. But some say there’s another force at work: aggressive servicing tactics. “Predatory servicing has attracted little attention, yet in many respects it is more vicious and the adverse consequences are more far-ranging,” says Jack M. Guttentag, professor of finance emeritus at the the University of Pennsylvania’s Wharton School.

Mortgage servicers collect and record monthly payments as well as manage insurance and tax payments on some $10 trillion in mortgage debt outstanding. They also manage defaults and collections when loans go bad. Critics of the industry, such as Rawle Andrews Jr., a bankruptcy attorney with Andrews & Bowe in Washington, call them “foreclosure factories.”

Servicer abuse is not new. Still, regulators had hoped the industry would have cleaned up its act since 2003 when the Federal Trade Commission and the Housing & Urban Development Dept. slapped a record $40 million fine on Fairbanks Capital Corp. in one of the worst cases of predatory servicing, which involved many of its 500,000 customers. Says Kurt Eggert, a professor at Chapman University School of Law in Orange, Calif: “The FTC hoped by nailing Fairbanks it would send a message to the whole industry. It hasn’t yet.”

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