“Across America, LLCs are buying up owner-occupied homes and turning them into corporately owned expensive rental units,” Mayor Baraka said. “In Newark, where we work hard to expand homeownership, we have created a wide-ranging strategy to do everything possible to counter this dangerous trend. The Homeownership Revitalization Program is a new way to enable longtime Newark residents to become homeowners at costs that they can afford.”
This ordinance is one of a package of measures in Mayor Baraka’s strategy to counter the effects of the purchase of owner-occupied homes by large-scale investors. Purchases of residential properties in Newark by corporate entities has caused rents to rise and owner-occupancy to fall, according to a new Rutgers-Newark research report – “Who Owns Newark – Transferring Wealth from Newark Homeowners to Corporate Buyers” authored by David D. Troutt, Distinguished Professor of Law, Director of the Rutgers Center on Law, Inequality and Metropolitan Equity (CLiME) and a member of the City’s Equitable Growth Advisory Commission. 47% of sales were sold to institutional investor buyers from 2017-2020 according to the study, and it recommends that in order for Newark to maintain affordable rents and homeownership, the city should impose equitable constraints on real estate markets to promote the general welfare of households and individuals.
With one in four Newarkers owning their own home, the Homeownership Revitalization Program is a key strategy the City will execute to expand homeownership and promote housing stability and wealth building among City residents. Mayor Baraka noted that the ordinance is a recommendation that grew out of the City’s work with its Equitable Growth Advisory Commission.
The first partner and Program Administrator in the Homeownership Revitalization Program is the Neighborhood Assistance Corporation of America (“NACA”) a national non-profit, community advocacy and homeownership organization that provides low interest mortgages to help people become homeowners and help people in financial distress to stay in their homes. NACA fights to close the racial wealth disparity gap through character-based lending. They consider people’s circumstances to help make affordable homeownership a reality. Additional Program Administrator(s) can be selected under the direction of the Department of Economic and Housing Development.
Bruce Marks, NACA founder and CEO, said, “We are very excited to partner with Mayor Baraka. This will be a national model where community residents can purchase a vacant residential home or lot for $1 and then renovate or build a beautiful affordable home. Everyone gets NACA’s Best in America Mortgage: no down payment, no closing cost, no fee, and no mortgage insurance at a below market fixed rate without consideration of one’s credit score.”
All qualified Newark residents may submit an application to purchase a property in the program. Prospective buyers must be Newark residents and must commit to reside in the properties for a minimum of 10 years. The properties will contain a deed restriction that states that the purchaser or any subsequent purchaser can have their property taken back by the City for any failure to comply. The minimum purchase prices of properties under this ordinance are flexible on terms that the City deems reasonable and could permit the sale of properties for one dollar with a mortgage covering the cost of construction or rehabilitation.
NACA will implement the program in partnership with the City and decisions will be based upon the ability of an applicant to carry out the financial and other necessities needed to become a successful homeowner. The Program Administrator will not take more than 12 applications per property. No one individual will be permitted to purchase more than one property. The application to purchase must include cost estimates for the work required to bring the property into conformance with all applicable state and local codes. The applicant must submit proof of acquisition financing and must demonstrate the financial means to redevelop the property as determined by gross annual household income, savings accounts or other liquid assets.
NACA Newark can be reached at (973) 679-2601.
With regard to other initiatives involving affordable housing and homeownership: An ordinance was introduced in the Municipal Council covering properties not under rent control. It requires landlord registrations for those property owners. In addition, an amendment to that law will impose fines to landlords that increase rents above five percent every two years. These fines will be used to fund the creation of new affordable rental and homeownership opportunities for Newark residents.
Since 2014, Newark’s initiatives and programs have focused on closing the racial wealth gap that is being exacerbated by the conversion of owner-occupied homes into corporate rentals. The work the City has done to provide affordable housing and home ownership are:
- Doubling the Live Newark Program to help residents become first-time homebuyers.
- Implementing the Neighborhood Development Program, which turns city-owned land into residential and affordable housing.
- Allocating a $20 million investment to create housing affordable to residents at a $34,000 income level.
- Using Land Bank properties to create Section 8 homeownership opportunities.
To view the ordinance, visit here.