A second legislative attempt backed by a wide range of state groups to transform the state's bursting pipeline of foreclosed homes into low-income housing was conditionally vetoed by Gov. Chris Christie late Monday.
But state Sen. Raymond J. Lesniak (D-Union), who shepherded the Senate version of the Residential Foreclosure Transformation Act through to the governor's desk, said Christie's suggestions don't touch on the purpose of the bill.
"It's obvious the governor does not want to deal with the foreclosure problem that in New Jersey is dragging down our economic recovery," Lesniak said. While Lesniak and Assemblyman Jerry Green (D-Plainfield) garnered praise from an unusual mix of business and community groups for pushing the measure through the Legislature a second time, Lesniak said he didn't know "where to take the next step when we have a governor who refuses to recognize we have a serious foreclose problem."
In his conditional veto message, Christie said efforts to tackle the state's foreclosure crisis should be handled by the programs established through federal funding that will be used by the New Jersey Housing Mortgage and Finance Agency over the next seven years. He also cited the immediate challenge of recovering from Hurricane Sandy's devastation.
"The state's foreclosure prevention program portfolio would be best served through the continued utilization of the $300 million of federal financial assistance, as opposed to the unavailable — and, in some cases unidentified — state funding sources that this bill relies upon," Christie said in his conditional veto message.
But Lesniak said the federal program Christie referenced in his conditional veto was enacted in 2010 to help delinquent homeowners avoid the foreclosure process, not to transform homes that have already been foreclosed on into affordable housing.
"This bill was meant to bundle the foreclosed homes that are sitting on the balance sheets of banks that have no idea what to do with them and to get them in the hands of private investors to have more affordable housing on the market. It has nothing to do with (President Barack) Obama's Hardest Hit fund," Lesniak said. "The conditional veto message had nothing to do with the bill that was conditionally vetoed."
A Christie spokesman was not immediately available to discuss Lesniak's comments this afternoon.
Still, Christie's message on Monday was less ruthless than his response to the Legislature's initial attempt at the New Jersey Residential Foreclosure Transformation Act, which included a provision to expedite foreclosures of abandoned properties and coincided with debate over the state fiscal 2013 budget. In his July 2012 veto of the original bill, the governor called Lesniak's first proposal "little more than a thinly veiled attempt to circumvent the tough choices required to meet the constitutional obligation of passing a balanced budget."
After Lesniak reintroduced the measure in the Senate without the abandoned property provision, he was hopeful Christie would sign the new bill into law, as it included the creation of a new financial structure for HMFA to leverage funds in order to purchase foreclosed properties and then sell them as affordable and market-rate housing.
Instead, Christie recommended HMFA use the state's $300 million share of the federal funding to set up foreclosure prevention programs that achieve the goals of the Hardest Hit program — like issuing grants or loans to help homeowners refinance first mortgages to a more affordable level — which Fair Share Housing Center attorney Adam M. Gordon said would "merely continue the status quo."
"This bill presented the framework for a step forward, but Christie said, 'Let HMFA use its existing programs.' Unfortunately, those have not worked for the New Jerseyans facing foreclosure," Gordon said. "This conditional veto doesn't provide any new resources or new programs or new leverage, so in essence, we don't need any legislation to do what it says to do."
In addition to New Jersey housing advocates, the measure received backing from groups representing bankers, real estate agents and developers in the state.
New Jersey Association of Realtors CEO Jarrod Grasso previously said the influx of foreclosed properties "have been the albatross preventing true recovery in the state … (and) without this legislation, the market will have to work itself out."
Jeffrey Kolakowski, director of government affairs for the New Jersey Builders Association, said the group supported Lesniak's measure, but declined to comment further.