Irvington, N.J., council members recently approved a resolution that moves the town a step closer to using eminent domain to seize underwater mortgages. The controversial strategy has received national media attention since the foreclosure crisis. Town attorneys last year began a study of the legal process that would allow Irvington to seize underwater home loans and restructure them to make payments more affordable for the borrowers.
The resolution, approved in a 6-1 vote, effectively brings the issue before the township Planning Board -- which will now identify properties “in potential foreclosure that may be designated as areas in need of redevelopment.” About 200 homes in the township may be eligible for eminent domain, estimates Mayor Wayne Smith. Irvington would use money from private investors to pay the fair market value of the loan, then restructure mortgages into lower principal payments. At least one investment firm has expressed interest already, according to Smith.
About 25 people with NJ Communities United rallied outside council chambers to call for the town to help struggling homeowners. The group presented the council with a petition of 2,000 signatures, field organizer Mary Szacik reported. More than 1,700 foreclosures have occurred in Irvington since 2008.