Wayne Meyer scans a master list of properties and tries to locate them on a foreclosure-ravished street in an impoverished neighborhood in Irvington, NJ. There are so many to choose from, he has to first get his bearings as he figures out which empty house he’s looking for. It’s just one of countless streets that feature the boarded-up visages of homes — some majestic and some modest — that have deteriorated as they lay vacant as a result of the ongoing foreclosure crisis in this part of the state.
Meyer’s goal is to figure out which of these properties can be saved, and which cannot, all in the name of preserving and stabilizing these historic neighborhoods that have fallen victim to all of the classic effects of hard times: crime, drugs, gangs, and property deterioration. This toxic stew has created what many worry is a long-term decline, with neighborhoods taking decades to rebound.
“This is probably the hardest area here — this is where the police officer was shot about 18 months ago. It’s really a tough area.” Meyer, housing director for the Orange, NJ-based community development corporation Housing & Neighborhood Development Services, Inc., (HANDS) points to one house and notes without embellishment that police had been there 30 times in recent months. He’s been to neighborhood watch meetings, heard residents’ horror stories about the decline of the neighborhood, and can only hope to be part of the solution that brings these areas — some of the original New York City suburbs — vitality.
Welcome to Urban Essex County, New Jersey, one of the hardest hit areas in the state by the ongoing foreclosure crisis. But it’s here that could serve as the laboratory for a reinvention of community development, as HANDS completes the successful acquisition of 47 mortgages on troubled properties with an eye toward stabilizing neighborhoods in some of the oldest suburban communities in New Jersey.
The acquisition project, dubbed Operation Neighborhood Recovery (ONR) and spearheaded by HANDS, is being touted as the first instance nationwide that a nonprofit organization has achieved that type of large-scale bulk purchase of mortgages. The properties, all vacant and abandoned, and many deteriorated, are located primarily in the New Jersey municipalities of Newark, Orange, East Orange, and Irvington.
The mortgage portfolio was purchased at a discount from Washington Mutual Bank (which has since become J.P. Morgan Chase) at roughly $50,000 per mortgage, according to Meyer, then-housing director at HANDS. The additional expense for rehabilitation of the properties is anticipated to bring the total cost to about $5.4 million. New Jersey Community Capital, a Trenton-based community development financial institution where Meyer has since been appointed as president, headed up the transaction, coordinating the debt and equity from financial partners that include Prudential Social Investment, LISC of Greater Newark and Jersey City, NeighborWorks America, and Enterprise Community Partners, as well as community partners consisting of a handful of prominent area community development corporations.
What’s interesting here is that while the partners could change, this project could serve as a national blueprint for similar initiatives. ONR is the cornerstone project for CAPC — the Community Asset Preservation Corporation. CAPC, a New Jersey nonprofit corporation, is separate from ONR and HANDS, but is working with ONR partners on the project. CAPC seeks to stabilize fragile neighborhoods and to protect homeowners and tenants from the toxic effects of the foreclosure crisis. It has established a long-term goal of recovering 1,000 to 1,500 living units in the next five years, and a one-year goal of one or two purchases of either notes or REOs, seeking $12 to $15 million of debt and equity financing.