Salowe-Kaye to Gov. Christie: Please, Don't Steal Mortgage Settlement Money

NJ.com — Friday, February 24, 2012

By John D. Atlas

Phyllis Salowe-Kaye, the executive director of New Jersey Citizen Action, and former advisory member of the Federal Reserve, is worried that NJ Gov. Chris Christie might squander the small but critical amount of money recently made available to New Jerseyans victimized by unscrupulous mortgage lenders. The money is supposed to be used for things like reimbursing people whose homes were illegally foreclosed on, or who are now underwater on their home mortgages.

Below is a guest op-ed by Salowe-Kaye that you must read.

Do not be fooled by the recent mortgage servicing settlement announced by the U.S. attorney general and 49 state attorneys general that has been touted as the best thing since sliced bread.

While the deal does call for principal reductions, refinances and other forms of relief, as well as new rules for mortgage services, the devil will be in the details. Much will depend on the program design, the implementation process and the enforcement mechanisms that are established to carry out the order.
The first level of supervision provided for in the settlement is a joke. The banks will be reporting on themselves, and we all know how well that will work. Even more disturbing, the settlement has set a paltry penalty for forgeries and the fabrication of documents at $2,000 per loan. The fact that there will be no jail time for offenders is just disgusting. And, despite the billions of dollars earmarked in the accord, the aid will only help a relatively small number of the millions of borrowers who are delinquent and facing foreclosure.

Nevertheless, the $837 million earmarked for New Jersey is hardly chump change. The bulk of this money is slated for direct homeowner relief. About $762 million will go to New Jersey borrowers in the form of principal writedowns, refinance programs and "other forms of relief." Additionally, $75.5 million is slated to go directly to the state. This money should be used to supplement meaningful state programs that have the potential to directly impact the lives of people in New Jersey in a significant and positive way. This money must be spent wisely.

Specifically the money should be used to supplement and expand assistance programs that actually work, such as the NJ Home Keeper Program. Settlement money also would serve the people of New Jersey well by granting capacity-building funds to existing free HUD-certified counseling agencies that are overwhelmed by the sheer volume of clients, as well as allowing funds to expand legal services.

Additionally, supporting the Mortgage Resolution Fund, spearheaded by New Jersey Community Capital, permits the bulk purchase of troubled loans by nonprofits and allows effected homeowners to remain in their homes. Also enormously helpful to homeowners and communities in distress is an innovative program proposed by state Senators Ray Lesniak, Barbara Buono and Assemblyman Jerry Green that would let municipalities and a state entity buy foreclosed homes. The people of New Jersey must take an active role in making sure that the settlement funds are used for their intended purpose. We need only to look at the state of Wisconsin where Gov. Scott Walker has announced plans to fill budget gaps with settlement funds to see how easily this settlement money can be stolen from the people it is intended to help.

We must insist that NJ Gov. Chris Christie use the settlement funds only to help struggling homeowners who are under water and the thousands of victims of foreclosure in our state. It would be a grave injustice if the settlement funds were diverted to benefit, however indirectly, the very rich through the 10 percent tax cut Christie now proposes. The 1 percent in our state — who have waltzed through this crisis with fat paychecks, outsized bonuses and golden parachutes — don't need any more help. It is the 99 percent in New Jersey who must endure pink-slip fever, robo-signed foreclosure notices, losing their homes, mounting debt or bankruptcy and threats to cut unemployment benefits. The settlement money is for them!

New Jersey Citizen Action welcomes the mortgage servicing settlement as a positive first step. But there is so much more to do to ensure that it has a positive impact on New Jersey homeowners. We need direct and meaningful remedies designed to keep New Jerseyeans in their homes, deal with vacant and abandoned properties, provide direct assistance to those have been displaced and stabilize the neighborhoods that have been devastated by foreclosure. Making sure that the settlement funds are used as intended must be our priority.

For more information contact NJ Citizen Action at http://njcitizenaction.org

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