Working With Grassroots Organizing Groups, Ras Baraka, Newark's Mayor-Elect, Takes Steps To Help Homeowners.

Newark's mayor-elect Ras Baraka has taken a bold step to address one of the city's and nation's most serious crises.

On May 20th, Baraka persuaded his city council colleagues to adopt a resolution that will help an estimated one thousand homeowners save their homes from foreclosure. It would give the city legal authority to protect homeowners trapped in underwater mortgages-- where their payment balances are higher than the fair market value of the property.

The city would secure funds from a private investor to purchase these mortgages and repackage them at terms homeowners can afford, based on the current market value of their homes.
Because of the failed leadership of Governor Christie, New Jersey tops the list of states struggling to overcome the foreclosure crisis. A new report, "Underwater America: How the So-Called Housing Recovery is Bypassing Many Communities," released by the Haas Institute at the University of California, Berkeley, found that Newark, Elizabeth and Paterson rank #2, #3 and #4 among the cities with the highest percentage of underwater homes.

The crisis was caused by Wall Street's reckless practices, including the epidemic of subprime mortgages, which banks targeted to low-income areas, particularly communities with a high proportion of minority residents.

When the housing bubble burst in 2007 many Newark homeowners saw their homes suddenly drop in value leaving thousands of homes in North Jersey at the brink of foreclosures.

"Newark voters elected the right candidate to lead the City in a new direction," said Trina Scordo, executive director of NJ Communities United, (NJCU) a growing grassroots force made up of low and moderate-income Newark residents.

Working with Baraka and Council leaders, NJCU is committed to using its grassroots power to help make sure Baraka's plan succeeds.

The city will begin the effort by asking the companies that own or service the underwater mortgages to sell them to the city through a third party.
If they refuse, the city will use its eminent domain authority to purchase the loans at current market value, based on appraisals. The city, (or a private or non-profit partner they contract with) will then reduce the mortgage principal owed to the current market value and work with the existing homeowner to modify or refinance the debt into an affordable mortgage.
The program requires front end pre-screening to help make sure the restructured loan will keep the current family in their home.

Not only will families be able to stay in their homes, but also the money they save on mortgage payments will be spent helping to sustain and grow local businesses.

After the crash the trustees for these mortgages--owned by dozens of distant investors as part of a pool--instead of negotiating with innocent homeowners, claim they lack the authority to modify them.

Using the city's power of eminent domain to modify the underwater mortgages will address blight in the city caused by vacant and abandoned homes, and save residents from becoming homeless.
NJCU, who lobbied for this plan, is playing an important grassroots role linking and mobilizing Newark's residents in support of Baraka's agenda.

On the same evening that Baraka led the vote on the housing issue, he also visited the Newark Student's Union during their sit-in at Newark Public Schools headquarters. NJCU in not only organized homeowners to support the innovative use of eminent domain to save homeowners, it has also adopted the Newark Students Union, providing the young leaders with space to meet, resources for their campaign work, and professional guidance from experienced organizers.

The students are fighting against what they believe is the myopic Christie led privatization of public schools that's undermining education reform.

Baraka's agenda won't come easily. His foreclosure proposal, which is similar to one proposed in Richmond, California, is controversial and will face strong opposition

But he appears to understands what liberals too often ignore. To be successful at politics and policy requires a combination of inside political maneuvering and outside mobilizing and protest. We'll soon learn how adept Baraka (the insider) and NJCU (the outsider community group) are at joining forces to make Newark a more livable city. If he succeeds it could be a model for other cities across the country.

John Atlas, author Seeds of Change: The Story of ACORN, America's Most Controversial Antipoverty Community Organizing Group (Vanderbilt University Press, 2010), a story about one group's efforts to reduce inequality, is president of the National Housing Institute. Atlas lives in Montclair and is working on a Sundance Institute supported documentary film inspired by his book on Acorn

A shorter version of this piece was published as an op-ed in the Star Ledger and