Democratic Front-Runner Unveils Plan to Make Wall Street Clean-Up State’s Home Foreclosures

TRENTON, N.J. – The Democratic front-runner for governor has unveiled a plan he says would take New Jersey from first in the nation in foreclosures to near first in the nation for affordable housing, courtesy of Wall Street's banks.

"Wall Street created the foreclosure crisis," Murphy said. "They need to be held responsible for fixing it."

New Jersey leads the nation in defaulted mortgages, with some 1.9% of housing units in the Garden State at some stage of foreclosure, nearly triple the national rate of 0.7%.

Murphy wants to use hundreds of millions of dollars in fines paid by Wall Street banks to the federal government to make amends for the subprime mortgage mess to write off New Jersey's bad loans once and for all—and then use those newly paid-off homes as affordable housing.

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

Murphy's plan calls for tapping the Department of Justice's (DOJ) Residential Mortgage-Backed Securities (RMBS) settlement—a multi-billion reparations account funded by the largest financial fines in U.S. history—and then turning them into affordable housing.

Because New Jersey represents 9% of the nation's foreclosed houses, Murphy said he would argue the state should receive 9% of the DOJ's remaining $7.4 billion in settlement funds—which amounts to $670 million.

Another Democratic candidate for governor, state Senator Raymond Lesniak (D-20) has been pushing this concept for years, most recently in 2013. However, Governor Chris Christie three times vetoed Lesniak's Residential Foreclosure Transformation Act, which would have turned vacant, already-foreclosed properties into affordable housing.

Murphy said under his plan, the state would not become a landlord, but partner with local community development corporations to match homes with deserving families.

in Legislative & Political News