Affordable Housing Units Hit By Foreclosures

September 23rd, 2008 | Tags: Foreclosures

The housing crisis has spared none – even the affordable housing units have been hit by foreclosures. In New Jersey the units that have been newly built conforming to COAH (Council on Affordable Housing) are threatened with loss because of foreclosures. Consequently the municipalities are concerned after having worked hard to create this affordable category of houses.

The units that have followed the requirements of COAH are restricted by clauses in the deed that stipulate that these can be sold only to those with modest to low income. But due to an oversight in the rules those that have been constructed between 1987 and 1999 the clause is not applicable if the mortgage runs into foreclosures, opined Richard Cushing, the town attorney of Clinton Town.

It has recently come to the notice of the Town Council that two such units are stamped with foreclosure. This is another problem – the municipalities learn about foreclosures only when the court auction is about to take place or when a notice is inserted in a local newspaper.

In Readington Town another such COAH unit has slipped into foreclosure. Similar is the case in Princeton Town in Mercer County. Robert Cutter, the administrator of Clinton Town apprehends sooner of later each and every town with these affordable houses will be facing the same problem. With the absence of the deed restrictions any purchaser who is willing to pay a high price can buy the unit. It is no longer reserved at a fixed affordable price for the weaker section.

Robert Cushing opines that the loss of these units is “bad for everybody”. The opportunity of owning an affordable house is lost. About 20 qualified residents of Clinton are waiting to own modest quarters with one room. They will be denied and disappointed. The sale would not take time – it could be done within a day. This applies also to the slightly bigger ones having two bedrooms. The second result is that it pushes a load on the taxpayer. The town has the responsibility of ensuring that the units are replaced. This can be done by giving incentive to the developer to go ahead with the construction of these affordable units. Alternatively the town authorities can do it by themselves. This would cost about $200,000 for each unit.

Foreclosures on these affordable units have affected the most vulnerable section of society that has no cushion to fall back on.