By David Cruz
On the day after the major foreclosure settlement, New Jersey Senator Bob Menendez was in Plainfield today, a city particularly hard hit by the foreclosure crisis. He was hosting a public hearing of his Senate Housing, Transportation and Community Development Subcommittee, to discuss the foreclosure crisis and to find ways to help homeowners on the brink.
Menendez said the settlement, in which five lenders agreed to pay close to $25 billion to close out an investigation into abusive foreclosure practices, was a good step, but not enough.
“When I realize that, nationwide, we’re looking at $700 million of families under water, $25 billion doesn’t seem to do more than just scratch the surface,” he said. “I’m happy for those who would be helped, but I’m also concerned that there are sectors that are not subject to the settlement like mortgages that are backed by Fannie and Freddie.”
Menendez announced that he’s introduced a bill to create so-called “Shared Appreciation Mortgages,” which would allow banks to reduce mortgage principals for homeowners underwater.
“In return for giving the lender interest in a future appreciation of the property so that the loan can be made more whole but the borrower can get some relief now,” he said.
According to today’s testimony, 125 homes in Plainfield are in foreclosure with another 500 on the borderline. Plainfield Mayor Sharon Robinson-Briggs says yesterday’s settlement was good news, but that, in general, banks need to work harder to make the loan modification process less difficult for mortgage holders in crisis.
“I would like to ask banking officials to … discuss the possibilities of forgiveness of back monies that are owed on loans, maybe up to three months,” she said, “or either put that on the tail end of a loan and allow people to be able to start over.”