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Thursday 23 January 2014

The New Jersey Assembly Appropriations Committee

The Foreclosure Transformation Act threatens all homeowners in New Jersey with massive wealth destruction.  The essence of the Act is that the State needs to sell bonds, create a new bureaucracy, buy homes out of foreclosure and convert or sell them to people who will use them for low-income housing, rehab centers or other social welfare purposes which destroy the character of their neighborhoods they are in.  The stated goals of reducing the supply of homes for sale and supporting home prices will fail on both counts. 

The uses for these converted properties, as contemplated by this Act, are simply not considered desirable by neighbors even if they are considered otherwise socially beneficial.  Location matters and prices reflect that reality. 

When you put homeless shelters or rehab centers next door, trust me, homeowners will prefer an abandoned foreclosure every time, because that house will ultimately be bought by someone and recover its value. With this Act and its 30-year deed restriction on converted housing, you will cause the value of all properties to crash, and then to stay down.

What happens next is even worse -- current homeowners will rush to sell their homes before the value goes to zero. It will be a fire sale environment, as this Act will achieve precisely what it purports to prevent – an oversupply of homes on the market, sharply reduced demand among homebuyers, and a massive housing price drop. 

Read MoreNew Jersey Assembly Appropriations Committee

Thank you
ziad k abdelnour

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