Despite need and funds, N.J.'s homeowner aid is little used

Posted: September 04, 2012

Struggling New Jersey homeowners, facing a quickening rate of foreclosures, are supposed to have a lifeline: the HomeKeeper program, run by the state and funded with $300 million from the federal bank bailout.

But 15 months after the program was launched, the state says only 10 percent of that money has been spent, to help just 750 homeowners.

According to a report from a U.S. special inspector general, New Jersey has drawn the lowest percentage of federal money available to the 18 "hardest-hit" states. (Pennsylvania is not on the list.)

This despite the fact that the Mortgage Bankers Association says New Jersey has the second-highest percentage in the nation of mortgage loans in foreclosure - 7.7 percent.

Intended to provide forgivable, no-interest mortgage loans to unemployed and underemployed homeowners at risk of losing their homes, HomeKeeper has had a slow response time, a lack of outreach, and strict rules that have disqualified needy people, according to housing advocates and homeowners.

The Christie administration is acknowledging the problems. In an interview last week, the official in charge said improvements would be evident by the beginning of 2013.

"I took a hard look at this program, and I didn't like the results that I saw," said Richard Constable III, commissioner of the Department of Community Affairs, appointed by Gov. Christie in January. "We will help thousands and thousands of residents," he said.

Already, he said, the state has picked up the pace in providing assistance. Since the federal inspector general indicated the state had spent just 7.49 percent of available money - about the same as Mississippi and far behind Oregon's 48.9 percent - more money has been used to help homeowners.

Getting the return call

A 49-year-old North Plainfield woman who had not heard back from HomeKeeper in 10 months showed up at one of the Republican governor's town-hall meetings in June. She tearfully told Christie of her situation, and his staff followed up with her.

Days later, Terri Blocker's application was reviewed and moved along. It was finally approved last week, a year after she initially applied.

"They start programs, they throw money out there, and no one is overseeing it," said Blocker, who lost her accounting job two years ago. She said if she hadn't been called on at the town-hall meeting, she would still be waiting for a call back from HomeKeeper.

Blocker, who lives with her college-student son, will have to pay only $35 per month on her $1,122-a-month mortgage; HomeKeeper will handle the rest. That will last two years or until she gets back to work.

She was eligible because she had lost her job within the last three years. If she sells within 10 years, though, she has to repay the loan. "At least I know my house is secure for a while," she said.

To move along applications like Blocker's more efficiently, the planned changes to HomeKeeper are both minor - last week program staffers began working out of the same office for the first time - and major - beginning Saturday, eligibility requirements will be loosened.

One change eliminates the requirement that the value of the house must exceed the value of the loan. That, Constable said, disqualified those in communities where home prices have plummeted.

After launching with fewer than five employees, there are now about 50 at HomeKeeper. Ten more are to be hired.

"We're now being smart about things," Constable said.

After a lull last year, the pace of foreclosures in the state has picked up, with bank repossessions up 21 percent in July from the same month last year - the fourth-most of any state, according to

That's in large part because banks are working to clear a foreclosure backlog Christie attributes to intervention by the state Supreme Court that slowed the process. In December 2010, amid the so-called robo-signing controversy, the court told banks to verify that they were following proper procedures.

"It's like putting a plug in the end of the hose, and the pressure builds and builds and builds, and when you pull that plug out, of course the water's going to come out faster than it would normally," Christie said in an interview. "But that should be no shock to anyone with common sense."

The crisis is not nearly as bad as at its peak. There were 62,775 foreclosures in New Jersey in 2009; in the first six months of this year, there have been 8,735.

No matter how the foreclosure numbers are interpreted, other data indicate trouble: The state has the fourth-highest percentage of overdue mortgage loans in the country, 16 percent as of June, according to Lender Processing Services, a supplier of foreclosure data.

The problems all stem from the national housing crisis.

To help address the crisis, the states most deeply affected were sent $7.6 billion in 2010 as part of the Troubled Asset Relief Program (TARP) - the bank bailout. That's how New Jersey got its $300 million.

Most of that money will go to HomeKeeper, but Constable said it could also be used for possible new programs, such as one to lower mortgage principal and another to buy foreclosed properties and sell them back to their former owners at lower interest rates.

Linda Fisher, a Seton Hall University law professor who has studied the foreclosure crisis, said the federal government deserved blame for not being aggressive enough in helping homeowners.

The special inspector general found that the U.S. Department of Treasury rushed the foreclosure-aid program out without setting goals to allow the public to measure progress. And it sowed delays by forcing states to get banks to cooperate instead of flexing federal muscle.

But state officials have not displayed enough urgency, either, Fisher said.

"All of these things involve multiple factors, so it's kind of like looking into a black box," she said. "And the black box is mostly bureaucratic delays and snafus."

Some critics say the Christie administration has worsened the housing problem.

They cite a $10 million cut to a loan pool for restoring foreclosed or abandoned properties, the veto of a bill to allow foreclosed homes to be turned into affordable housing, and continued court fights to dismantle the Council on Affordable Housing.

Christie says he is eliminating bureaucracy. Administration officials argue that though money may be redirected, money for struggling homeowners isn't being reduced.

$72 million more in aid

There's a second pot of aid housing advocates are concerned about: money New Jersey recently got from settlement of a suit filed by 49 state attorneys general and the United States against the largest loan servicers, alleging that the banks illegally signed foreclosure documents.

As part of the deal, New Jersey received $72 million to address foreclosure issues. The state budget calls for the money to be spent this fiscal year on existing programs, such as rental assistance, affordable housing, and welfare.

Housing advocates say the money is just replacing funding that was redirected elsewhere in the budget - such as to the governor's proposed tax cut - as opposed to increasing money for housing programs. They worry that after this money runs out, the programs will face a shortfall.

Staci Berger of the nonprofit Housing and Community Development Network of New Jersey says the $72 million will never go to the people it is intended to help.

"Instead, they are playing a shell game with the funds, and not doing anything else in a significant way to solve or even acknowledge the problem," she said.

A spokesman for Christie's Treasury Department denied that. The $72 million "relieves spending in some areas, but it doesn't mean next year they're going to get a $72 million cut," Bill Quinn said.

"It just means next year the funds could come from somewhere else," he said.

Contact Matt Katz at 609-217-8355,, or follow on Twitter @mattkatz00. Read his blog, "Christie Chronicles," at

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