Herald News

Show Puts Foreclosure In Spotlight

Experts, city officials discuss 'American Nightmare'

Herald News — Friday, April 25, 2008


Crime, recession, shrinking 401(k)s, dwindling local tax collections.

A New Jersey public service program airing on cable pins these maladies to home foreclosures. And producers selected Paterson to display the difficulties local residents and governments are facing.

"(Foreclosures) lead to criminal activity," said Mayor Jose "Joey" Torres, during an interview for the segment airing on Cablevision.

The hour-long program, titled "American Dream or the American Nightmare," features interviews with experts on banking, consumer rights and the economy, along with Torres and East Orange Mayor Robert Bowser. The speakers offer advice to homeowners, discuss why the mortgage crisis has happened, and assess the extent of its effect – which is expected to peak next year.

National and state leaders have paid increasing attention to the mortgage problem since foreclosures began to rise sharply across the country last year. But the League of Municipalities, a statewide association of town officials, chose to sponsor the TV program because of the fear that foreclosures will cause a drop in property tax collections.

"You might say this is a banking issue," said Michael Darcy, assistant executive director of the league, "but municipalities are in the middle of this."

In Passaic County, foreclosure filings nearly doubled between 2005 and last year, growing to 670, according to the Sheriff's Department. Essex and Union counties average even greater numbers of foreclosures, but Darcy called Passaic County's rate "severe."

Mayor Torres agreed.

"One is bad enough," he said.

On the show, Adam Greenberg, of the Tax Collectors and Treasurers Association, said municipal tax coffers tend to decline when taxes must be collected from a bank that repossesses a property.

Additionally, every homeowner will feel the burden of an increase in uncollected taxes, which are redistributed to other property owners, he said.

Tax collectors in Hawthorne, Passaic and Paterson said that, so far, their collections were on target. A bank legally must pay taxes if a house goes into foreclosure, and it is not in its best interests to lose the property to a lien.

But Kathleen Gibson, the tax assessor in Paterson, said she was waiting until the June tax sale on properties to get a better sense of who is not paying.

"I have been curious," Gibson said.

Local homeowners more immediately feel the effects of foreclosures. During the program, Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, said her advocacy organization can't keep up with the volume of calls from "desperate" homeowners.

Too many of residents call too late, Salowe-Kaye said. Nationally, about 3 percent of people behind on their mortgages successfully work out a payment plan with their banks, she said.

"I don't think it's as easy as picking up a telephone and calling a number," said Salowe-Kaye, whose agency runs an office in Passaic.

Still, Salowe-Kaye advised any homeowner with an adjustable-rate mortgage to seek out help from a nonprofit financial counselor before trouble arises.

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