Irvington, N.J., has stepped out in the forefront of efforts to save the homes of many of its residents, announcing on Saturday that it will use eminent domain to buy mortgages in foreclosure so that residents can stay in their homes.
The plan would make Irvington the first municipality in the country to use the maneuver, which is being intensely fought by the banking and mortgage industries and the federal government.
“When you hear [eminent domain], you usually think of people being talked out of their homes (for corporate development), but what we’re trying to do is recast it so that people can stay in their homes,” Irvington Mayor Wayne Smith said at a Saturday news conference.
Irvington will focus on private label security mortgages — those that are not backed by the federal government—to try to avoid litigation that has consumed the town of Richmond, Calif., which had made moves to try out a similar plan.
Smith said the city will avoid being sued by using “friendly condemnation,” which offers incentives to the mortgage owners if they agree to avoid litigation.
Irvington officials say they want to take over and re-mortgage at least 500 to 1,000 of the 1,800 homes that have been foreclosed on in their city during the housing crisis. Essex County, which includes Irvington and neighboring Newark, had the region’s highest concentration of foreclosed homes during the height of the recession in 2009.
Mortgages linked to private-label securities are especially difficult for homeowners to renegotiate because it’s sometimes nearly impossible to figure out which companies own or have the power to make decisions about their mortgages.
“These days, mortgages are cut up and sliced up,” Udi Offer, executive director of the ACLU of New Jersey, a supporter of the Irvington plan, told Al Jazeera America. “There are so many owners that it’s impossible to get everyone in a room about principal reduction.”
That has led such cities as San Francisco, Oakland, Pomona, Sacramento, Newark and New York City to consider following Irvington’s lead.
The legal basis of using the doctrine is “crystal clear,” said Anika Singh Lemar, visiting clinical professor at Yale Law School, but “the tougher question is whether it’s a public use. There has to be an inquiry about whether, in a particular neighborhood, amelioration of blight would qualify.”
That won’t be hard in cities like Irvington, Newark and Detroit, where residents have seen a correlation between mass foreclosures and crime, drugs and fires.
