BUSINESS & ECONOMY

Using Eminent Domain to Seize ‘Toxic Mortgages’

By Brenda Flanagan
Correspondent

“It was a great neighborhood, once upon a time ago,” said Milton Ford.

Lifetime resident Ford pointed to the problem: burned out, ripped up and ransacked houses — foreclosed and vacant homes — a plague of blight and crime in Newark’s Fairmount section.

“It’s bad. It’s bad out here. You don’t have nobody that will, is gonna buy them, or even want to pay their mortgages. But you also gotta understand, they pay so much! They don’t have no money,” Ford said.

Stroll down this block on 16th Street. Only four families live on this street, Ford says mostly because of foreclosures.

Here’s an example: neighbors tell us a man bought a house. It looked like the one next door. But he put a lot time and money into fixing it up. But then he couldn’t make his mortgage payments, the bank put him in foreclosure, took the house. It’s boarded up, and it’s been vandalized.

“And many of those folks, they’re like, ‘You know what, I’ve tried to negotiate , tried to get a modification, refinance, it didn’t work out for me. I can’t do this anymore,'” said Mary Szacik.

Szacik of New Jersey Communities United says some homeowners can be saved. Her group will work with the city of Newark, which carved out a 20-square-block section called “West Ward Model Neighborhood.” Out of 740 homes here, 200 are in foreclosure, abandoned, vacant or just empty lots — 25 percent. The city will declare eminent domain and seize, not the houses. It will seize the so-called toxic mortgages. Banks and trusts will get fair market value. Homeowners will get new mortgages with payments they can afford.

It’d be a lifeline for Ezekiel Iwarimie. He’s in foreclosure, threatened with eviction.

“It was because of the threat that I’m still there,” he said. “That made me want to fight, yeah.”

Iwarimie is hoping eminent domain can keep his house out of foreclosure. Zillow says it’s worth $270,000. His mortgage — resold four times to different investors — now totals $418,000.

“They actually make more money in the process of foreclosure than they would if they just wrote down the mortgage and kept the homeowner in their home,” said Szacik.

“There is no way anybody can meet their demands. So eminent domain is the right way to go,” Iwarimie said.

We never got a call back from Iwarimie’s mortgage holder.

Newark’s Mayor Ras Baraka says, “We must take action to help families stay in their homes and promote a strong, safe and growing community. By restoring and maintaining prosperity in this neighborhood, we will set a standard for how we transform Newark into a city we can all believe in.”

In Ford’s view, people won’t move back without help.

“It’s a big issue. And it needs to be addressed,” said Ford.