April 8, 2010; Jersey City Independent | There’s news to celebrate and news to raise concerns in this story from the Jersey City Independent. The Jersey City Episcopal Community Development Corporation, perhaps as good a CDC as exists in New Jersey’s second largest city, has purchased its first bank-owned foreclosed home under the federally funded Neighborhood Stabilization Program (NSP).
Sitting across the Hudson River from Manhattan, Jersey City is located in an expensive housing market and low, moderate, and even middle income households need help competing in a market that services the young professionals who commute into New York City for high paying financial sector jobs.
JCECDC will do a good job. But for this great nonprofit only now to be acquiring its first NSP house suggests just how difficult it is to get foreclosed properties from banks at prices that make sense and, with subsidies and financing, bring them back to the market at affordable prices (this home will sell for $245,000). It also shows how slowly the NSP program is moving, to no fault of JCECDC and perhaps even to the city.
The subprime foreclosure crisis had devastating effects on many neighborhoods, and the economic freefall that began in the third quarter of 2008 led many homeowners with conventionally financed mortgages to join the ranks of those facing foreclosure. The various “voluntary” programs of both the Bush and Obama administrations to get banks to restructure mortgages or to disgorge foreclosed properties to legitimate neighborhood builders (as opposed to speculators and flippers) have been far from stunning successes.
The work of the nonprofit sector in fighting the foreclosure problem is laudatory. But from a public policy perspective, the molasses-slow flow of NSP funds points out that our nation hasn’t yet really come to grips with an effective response to the housing crisis that is undermining urban neighborhoods and still functioning as the weak underbelly of the U.S. economy.—Rick Cohen