BUSINESS & ECONOMY

NJ Has 3 of 5 U.S. Cities with Highest Percentage of Underwater Mortgages

By Brenda Flanagan
Correspondent

“And now I’m thinking, how am I going to make this month’s mortgage payment? And you go coo-coo a little bit.”

Sixty-one-year-old Victoria Addo bought her Newark townhouse seven years ago for $96,000; moved here from the Bronx. But the recession hit, she got hurt and lost her job.

“Oh, it is hard because I’m on Social Security, disability,” she said.

Now Victoria owes more on her mortgage than her home is worth. Her mortgage is underwater.

“They nearly foreclosed,” she said. “That’s why I applied for modification.”

Victoria resembles the snapshot of many New Jerseyans with underwater mortgages, says Phyllis Salowe-Kaye of New Jersey Citizen Action.

“Working families who are faced with either a job loss, or a reduction in income who are not able to make their mortgage payments and who are living in an area or a town where property values have dropped so far below where they were when they purchased their homes,” she said.

New Jersey’s got more than its share of upside down mortgages. Out of five U.S. cities with the highest percentage of underwater mortgages, New Jersey can claim three: Newark, with 54 percent; Elizabeth, 53 percent; and Paterson with 49 percent. Remedies are complex.

“You end up losing your home unless you have a servicer or a lender that is willing to work with you and do principle reductions,” Salowe-Kaye said.

She says a few private mortgage companies — like Ocwen — offer to refinance underwater mortgages by reducing the principle amount owed. And homes with mortgages financed by government agencies like Fannie Mae might also soon offer principle reduction programs under a bill just introduced by Sen. Bob Menendez.

“That keeps revenue coming to the federal government, it keeps the family in their home, it keeps communities stronger, it keeps ratable bases more solid,” Menendez said.

In Newark, the city’s now exploring the use of eminent domain to keep underwater mortgage holders in their homes. Some of Victoria’s neighbors moved out, but she says her block’s improving and she wants to stay.

“That’s how I see it. Before you’d be sitting on the porch and hearing shots around and everything. But this time it’s gone down in this area,” she said.

Some New Jersey towns saw property values rebound after the recession. In others, homeowners are still struggling to keep their heads above water. They say they won’t make it without help.

Chasing the Dream: Poverty and Opportunity in America is a multi-platform public media initiative that provides a deeper understanding of the impact of poverty on American society. Major funding for this initiative is provided by The JPB Foundation. Additional funding is provided by Ford Foundation.