February 3, 2005: From the sagging seat of state government in Trenton to the west,
to corruption plagued Hudson County in the east; from drug
ravaged Camden in the south, back north to Newark where the inner
city death toll rises while downtown gets revitalized, things
are seriously amiss in the Garden State. Last autumn X Governor
Jim McGreevey resigned, citing his hitherto hidden gayness as
the reason for his X-it. Quel beard! Myriad corruption scandals,
most of them development related, were nipping at his heels. In
November, New Jersey Senate President Richard Codey began serving
out the remainder of Jimbo's term. Codey proved a surprising
success. Seeming a competent administrator with some genuine
interest in reform. His popularity with voters was rising and
polls showed him able to defeat Republican challengers in the
next gubernatorial election. Most amazing of all, Codey didn't
seem to eat lizards for lunch or to be living in the pockets of
the entrenched state party bosses who've helped perpetuate
Trenton, Hudson County, Camden and Newark.
So-- will Richard Codey run for governor when his Jimbo time
is up? Continuing to clean up Jersey's image and maybe even its
practices? Nope. Codey will be bowing out. Making the primary
road smooth for Senator Jon Corzine. Aka Corzine the Mighty. The
half-a-billionaire* flavor fave of the entrenched state party bosses
who've helped perpetuate Trenton, Hudson County, Camden and
Newark. No need to worry though. Corzine will be running as a
reformer. From his new home in Hudson County. Where his upcoming
candidacy is already healing divisions among political factions.
As they line up behind Corzine, bootylicious visions dance in
their head. And Jim McGreevey? Despite the cushion of a $500,000
"transition" fund provided by the state until May, Jimbo is
working hard-- not hardly working. Doing municipal real estate
deals in the law offices of State Senator Raymond J. Lesniak.
His long time supporter and one of those entrenched state party
bosses who-- well, you know.
Another state trench boss is Donald Norcross, co-chairman of the
Camden County Democratic Party. Though it boggles the mind why
any pol from Camden County would have enough cred to be cloutful.
Given the condition of the city of Camden. Last November, Camden
knocked Detroit off the top slot as "the most dangerous city
in the United States" in the "City Crime Ratings" published by
the Morgan Quitno Corp, which uses FBI crime data to determine
rankings. Why has Camden become Hit City? An example of Camden
Between 1996 and 2004, crack dealer Keith Jenkins and his droogs
brought more than 2000 kilos of coke into Camden. The majority
was converted into crack in stash houses scattered around the
city. The product was sold in Camden and other South Jersey
communities, as well as in Delaware and Maryland. The business
sometimes pulled down over $800,000 a week. Jenkins
laundered and increased his profits via Camden real estate deals.
Under the business name of Panache Enterprises, LLC. Family
members, several of whom were employed by the city of Camden and
its school board, masked Jenkins' control of the company. Panache
bought slums and had druggies do sub sub-standard renovations.
Jenkins paid his "workers" with crack 3 times a day. Jenkins'
girlfriend was a realtor. She helped him flip the dumps into the
hands of unqualified buyers. At massively inflated prices. Some
buyers were naive. Others were illiterate or mentally disabled.
Some were made of straw. Jenkins made them all look qualified
with phoney paper; including pay-stubs, credit verifications,
employment histories and social security numbers. Most of
Jenkins' homebuyers defaulted on their mortgages.
The majority of those mortgages were backed by the Mortgage Loan
Insurance Program, a home-ownership assistance program operated
by the Federal Housing Administration (FHA) a division of the
U.S. Department of Housing and Urban Development (HUD). FHA
insured loans typically require less stringent eligibility
guidelines, lower down payments and closing costs. The Mortgage
Loan Insurance Program protects HUD designated lenders from
taking a hit on loan defaults-- in order to encourage more
mortgage loans being made to low and moderate income buyers.
On January 13th a federal jury convicted Keith Jenkins of a host
of charges related to his crack seeded, government backed
mortgage frauds. His mother was the only family member involved
who didn't turn witness against him. Jenkins could face life in
prison. If only he could be joined in his cell by the various
local political reps and agency officials who helped funnel HUD
home ownership assistance into Camden and who for years, didn't
seem to notice the outsize property values of dumps in a drug
dealer's paradise. Ditto for any equally blind designated
lenders. After all, it's not like this was the first time HUD
has been suckered in Scamden: by now all eyes should be peeled.
In the meantime, low and moderate income Joe & Joan Taxpayer get
to pick up yet another unpaid Ownership Society bill. Which they
can place in their portfolio next to their piece of Iraq.
More Jests From Jersey
1) Last September, HUD sent a letter to the Newark Housing
Authority, asking the agency to explain its policy on hiring
family members. At issue are the activities of Kelstar Rising,
Inc., a nonprofit organization run by the daughter of the
authority's executive director, Harold Lucas. Kelstar has been
on the Housing Authority payroll, as has Mr. Lucas' wife, son,
daughter-in-law and sister-in-law. Until 2003, Mr. Lucas served
as attorney for Kelstar. According to the 09/17/04 NY Times, one
of Kelstar's duties is to assist "with the housing authority's
annual Summer beauty pageant". Hopefully, none of Harold Lucas'
relatives compete in the pageant. Or Kelstar could find itself
in a Judgement of Paris position.
2) In a January article appearing in an area paper, a low
level Jersey City pol who serves the people for several hours
a week described his other career as that of "real estate
investor". Attention Inman News and other industry publications--
the housing bubble is now officially deflating! When Hudson
County pols come aboard, bandwagons historically turn into
drunken boats. Something Cap'n Corzine might want to remember.
A report called "A House of Cards: Refinancing the American
Dream" by Javier Silva was released in January by Demos,
a New York based public policy organization. "House" argues
that stagnant wage growth and rising costs have led families
(particularly young families) to become overly dependent on
credit and that in order to pay off the ensuing debt, people are
dipping into their home equity at unprecedented levels. Owning
far less of their homes than in past decades. The report also
posits that a rise in mortgage fraud, driven largely by mortgage
brokers and appraisers, has helped inflate home values. To the
point where financially strapped homeowners who've refinanced
will take a fatal hit "if and when the housing bubble bursts".
"House of Cards" makes a compelling case about how home equity
has become an economic fix for American workers-- and by
inference, for the American economy. But the emphasis on mortgage
brokers and appraisers as the nexus of mortgage fraud is
overstated. There are many other players. Including lenders.
The growth of federally insured mortgage arrangements, fee rich
sub prime lending, plus the speedy transmigration of mortgages
into investment securities largely marketed by Government
Supported Entities (GSEs) has helped make lenders less fearful
of default. As result, some have become fraud friendly. Though
"House" acknowledges lender issues, its reform recommendations
are overly focused on regulating relatively low level players
and forgiveness of mortgage debt. Rather than correcting the
root problems caused by a sea change in real estate practices.
Many of which stem from increased government/taxpayer support
of the housing market. It's also important to remember that one
of the rising costs that keep families scrabbling and relying
on debt are taxes.
As an organization, Demos is an advocate for the power of
government. Believing in its ability to broadly transform. On its
website, Demos tut-tuts over a perceived rise in disrespect for
government and shakes its finger at those who subject government
to "denigration". Of course at QT the motto re government is
denigrate, denigrate, denigrate. Based on the belief that too
many trench bosses now clog its halls. And that what really
has the power to transform is laughter-- aimed at those who try
to make society their own little fiefdom and/or cash cow.
Besides, if Americans now view government with such jaundiced
eyes and have lost belief in its power to transform societies,
why are we in Iraq?
Carola Von Hoffmannstahl-Solomonoff
A House of Cards: Refinancing The American Dream by Javier
Silva can be found at the Demos website. Plus, Demos is hosting
a February 8th discussion in NYC on the Housing Bubble. Info
about the event is also available at the site.
*Though the debate rages over Corzine's actual worth, general
consensus puts it in this ballpark.
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