http://www.philly.com/philly/news/20121024_Christie_administration_acknowledges_foreclosure_lapses.html

Published October 24, 2012
By Matt Katz

TRENTON - The Christie administration Wednesday acknowledged failure in managing $300 million in federal money to help struggling homeowners but declared that the problems had been fixed and an increasing number of homeowners were being saved from foreclosure.

"Listen, it's indefensible; the program was not being run well," said Department of Community Affairs Commissioner Richard E. Constable III, who inherited the issues after he assumed his post in January. "We did a disservice to the folks that we were supposed to serve."

But Democrats, who called a joint hearing of two Assembly committees to ask Constable about the problems with the program, framed the issue as reflective of Republican Gov. Christie's continued disregard for struggling homeowners.

Christie is "not understanding the severity of the foreclosure crisis in the state," said Assemblywoman L. Grace Spencer (D., Newark). Democrats and housing advocates listed a range of concerns, from the governor's vetoes of foreclosure-related legislation to the pace at which he's spending money to help homeowners.

New Jersey has the third-highest percentage of foreclosures and overdue mortgage loans in the country, according to Lender Processing Services, a supplier of foreclosure data.

The state suffered from the collapse of the housing industry more than most, and the $300 million from the Obama administration's 2010 Hardest Hit Fund was supposed to rectify that. But a report from a U.S. special inspector general earlier this year found that New Jersey had drawn down the lowest percentage of federal money among 18 states in the fund.

The findings were initially reported by The Inquirer in September, but they drew wider attention three weeks later - and prompted a call for hearings by Democrats - when Christie snapped at a TV reporter who asked about the issue.

Constable said that the HomeKeeper program, which was created with the $300 million, took a while to get started because unlike other states, New Jersey had never done anything like it before. HomeKeeper provides forgivable, no-interest loans to those who are unemployed or underemployed and falling behind on their mortgages.

In rolling out the program, Constable said, "mistakes were made." And the governor, he said, "was extremely unhappy, to be charitable."

Christie has since publicly stated that the program had issues. "Let's face it, we're not going to do everything perfect in this administration," Christie said earlier this month. "But when we identify a shortcoming, we fix it."

Applicants have complained about a lack of response from state intake workers and onerous restrictions on applicants.

One struggling homeowner, Celeste Wright of Newark, testified at the hearing that she was "elated to know there was help for people like me" when she heard about HomeKeeper. But after applying, the single mother - who had recently been laid off - said she waited more than a year to hear back, only to be told she was ineligible.

Constable was not in the room for Wright's testimony; he had left for a meeting in North Jersey.

But in his testimony, he said that the number of staffers who handle the requests had increased from six to 47. Restrictions were loosened to broaden the number of people the program helps, and new public service announcements let homeowners know how to get help. (Information can be found at www.njhomekeeper.gov or 877-496-4951.)

As of this week, HomeKeeper has spent nearly $59 million, with an average loan of $40,000, according to the state. In January, only $2.1 million had been spent to help 56 homeowners. Much of that money was for administrative costs.

The problems, according to housing advocates, go beyond HomeKeeper. Staci Berger of the nonprofit advocacy group Housing and Community Development Network of New Jersey, based in Trenton, said there was a "lack of coherent foreclosure policy from this administration."

Specifically, she noted that another pot of money - $800 million from a multistate legal settlement - that is intended to go to New Jerseyans affected by the foreclosure crisis. Christie is using some of those funds, $72 million, for existing housing programs, which Berger says is not its intent.

The rest of the money is supposed to be disbursed by the banks, but Berger said the state attorney general needs to ensure the funds move quickly to the right people.

"Perhaps the governor and members of his team simply don't understand how dire the situation is for our families," she said.

Advocates are also upset that Christie hasn't signed foreclosure-related legislation.

The Assembly housing committee on Wednesday approved three bills to address the foreclosure process, with Democrats voting in favor and Republicans against.

One of those bills empowers the state to purchase foreclosed properties so they can be turned into affordable housing. A similar bill - which was supported by groups for banks, builders and Realtors but opposed by the tea party - was vetoed by Christie last summer.