Federal Housing Fund Throws Lifeline To New Jersey — But It's A Short One

Last month, the Obama administration announced it would send $112 million to New Jersey as part of a program aimed at helping unemployed homeowners stay in their houses while searching for jobs. But real estate experts say the money will be only a Band-Aid slapped on a very large wound.

Currently, experts say that some 213,768 homes are considered distressed properties in New Jersey, a figure representing about 14.1 percent of houses. The combined monthly mortgage payment for these homes is nearly $500 million but, through the Obama administration's so-called Hardest Hit Fund, the state likely will receive only about $112 million — not even enough money to cover one monthly payment for all of theses struggling homeowners.

Mark Brandemuehl, vice president of marketing for Movoto.com, a California-based real estate firm that analyzes property markets in several states including New Jersey, said that only about 1,500 to 2,000 people in New Jersey are likely to receive assistance.

"It will be like winning the lottery for those who get the funds but the problem is that not many people will have access to the money even if they qualify for it," he said.

Looking at the recent history of real estate activity in Montclair, Brandemuehl painted a gloomy picture. He said that 140 homes were on the market six months ago compared with 225 today. The median home price has gone from $579,000 to $509,000 in the last six months while a house's average time on the market has gone from 41 days to 97 days.

"I'm a little skeptical of the [Hardest Hit Fund] ... how can this turn around such a big mess?" he said.

New Jersey is one of 17 states eligible to receive a portion of the $3 billion in taxpayer proceeds the federal government has funneled into the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets. The money to pay for the fund is being drawn from $50 billion put aside for homeowner assistance from the $700 billion Wall Street bailout. California is due to get the largest chunk of the Hardest Hit Fund, receiving about $476 million.

Brandemuehl said that although the country endured a first round of foreclosures in 2007 and 2008, the country is now entering a second round of foreclosures resulting from people losing their jobs.

In New Jersey, the unemployment rate has hovered just above 9 percent for more than a year.

When contacted, New Jersey's Housing & Mortgage Finance Agency said they won't know any specifics about the Hardest Hit Fund or applying for the program until the first week of October. Those with questions can contact the agency at 1-800-NJHOUSE.