Real Estate in New Jersey

Real Estate in New Jersey is a very valuable commodity.  Whether you are referring to North NJ, Central NJ or South NJ; real estate in New Jersey has a tremendous amount of value.  This is if you are interested in selling or buying.

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This is from a recent article from NorthJersey.com

Out-of-state investors earn support in NJ

 


Sunday, September 17, 2006

By RICHARD NEWMAN
STAFF WRITER

 

To prove they come as friends, out-of-state banks are pumping billions of dollars into affordable housing, small businesses and community development projects in New Jersey's less affluent areas.

Most recently, Wachovia pledged $8 billion in small business loans, affordable mortgages and community development loans and grants after negotiations with New Jersey Citizen Action and the Housing and Community Development Network of New Jersey. That commitment, made just last month, comes on the heels of Bank of America promising a $10 billion investment in the state over three years. Both banks are based in North Carolina.

Meanwhile, the politically connected community groups are in talks with New York-based J.P. Morgan Chase, Maine-based TD Banknorth, and HSBC, based in Buffalo, N.Y., in hopes of securing billions more in pledges through so-called Community Reinvestment Act agreements.

Such deals are named for the 1977 federal law that rates banks based on the amount of business they do in low- and moderate-income tracts. Though there are rarely sanctions for bad ratings, poor performance can lead to problems when the banks try to merge, not to mention lead to bad publicity.

The agreements, which have been growing in New Jersey as deep-pocketed banks move to the state, are creating more financing options for mom-and-pop businesses, first-time home buyers, and real estate developers. The lion's share of the investment is expected to be for housing, retail development and small business loans in New Jersey's largest cities.

Community clout

Larger banks always say they like to "give back" to the community, and most do. They routinely participate in community development projects, both to satisfy regulators and burnish their reputations, whether or not they have entered into CRA agreements.

They also underwrite special home-loan programs designed for people who would not qualify for a conventional loan.

They provide grants and below-market-rate loans for affordable housing developers and funding for financial literacy programs, community centers and health-care centers in low- and moderate-income neighborhoods.

Although these loans don't provide the same returns as commercial banking, they are usually profitable. Even outright grants bring tax breaks.

In states like New Jersey, California and North Carolina, where community development advocacy groups have considerable political clout, banks are more likely to set specific goals in writing, pledging support for pet projects of the non-profit development groups.

The result is that there is more investment in low- and moderate-income neighborhoods than there otherwise would be in those states, according to Josh Silver, a vice president of research and policy for the National Community Reinvestment Coalition in Washington, which lobbies for 600 member groups around the country.

"If there were no CRA or community activism, there wouldn't be as much of this activity going on," he said.

"Big banks have been reticent to do business with us, and sometimes it becomes adversarial," added Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, which is a member of the coalition.

Salowe-Kaye turned up the pressure on Wachovia when it announced plans to acquire Golden West Financial, parent of World Savings Bank.

And Wachovia, which operated in New Jersey for two years with no CRA agreement, came to the negotiating table.

"The Golden West merger is an important merger to us and we recognize that New Jersey Citizen Action wanted to ensure they could negotiate certain things," said Rosie Saez, a senior vice president at Wachovia who was involved in the negotiations.

Heading off opposition

Wachovia reached a 10-year, $150 billion community investment agreement last month in California, where Golden West is based, to avoid merger challenges from dozens of community groups there.

North Fork Bancorp, which acquired Jersey City-based Trust Company Bank two years ago, has declined to form an agreement with Citizen Action, and when it announced it would be acquired by Capital One, the group filed a challenge with federal regulators.

In exchange for the five-year pact with Wachovia -- which begins next year and includes $5 billion in small business loans and $2 billion in affordable mortgage loans -- New Jersey Citizen Action sent a letter to regulators in support of the Golden West deal, expected to close next month.

The Wachovia agreement in New Jersey includes a promise to invest $35 million in projects sponsored by non-profit development companies statewide over the next five years.

Part of the commitment is a $3 million investment in the New Jersey Predevelopment Loan and Acquisition Fund, which makes below-market-rate loans for land acquisition. The fund will "level the playing field" for groups like Habitat for Humanity of Bergen County, which build homes for low-income buyers and which must compete for land with private developers, said Paige Carlson-Heim, acting director of the Housing and Community Development Network of New Jersey, which has 140 non-profit member groups.

To address shortfalls in small-business lending goals in New Jersey, Wachovia expanded its five-year target from $4 billion to $5 billion and lowered its minimum loan amount to $5,000 from $25,000.

It also will offer below-market interest rates on business loans in low- and moderate-income neighborhoods, participate in a Small Business Administration loan program with fast-tracked approvals and offer below-market lines of credit for non-profit housing developers.

Pressure pays off

Wachovia hopes letters of support from influential community groups like Citizen Action blunt the impact of challenges to the merger filed by New York City-based Inner City Press, and the Berkeley, Calif.-based Greenlining Institute. Such challenges rarely block a merger, but they can be a public relations headache for banks.

In its CRA agreement in New Jersey, Bank of America pledged $10 billion in community development loans and investments over three years beginning in 2005. That pledge is part of a 10-year $750 billion national goal, established under pressure from community groups in New England, New York and New Jersey in connection with its merger with FleetBoston Financial.

Under an agreement with Citizen Action, Bank of America made $2.3 billion in community development loans and investments in New Jersey in 2005, with more than $800 million devoted to affordable housing, said spokesman Ernesto Anguilla. On Raymond Boulevard in Newark, near the New Jersey Performing Arts Center, Bank of America made a $46 million construction loan last year to convert a historic office building into 317 units of housing, shops and a health club.

In Orange, it provided a $5.2 million loan for a 300-unit housing rehabilitation project for low- and moderate-income residents.

Pittsburgh-based PNC Bank, which has about six months left in a three-year $883 million community investment agreement, recently invested $250,000 to jump-start a $7.5 million 44-unit housing development in a former East Orange hat factory, said William Best III, a PNC regional manager for community development.

Other banks with CRA agreements in effect in New Jersey include Washington Mutual, Sovereign Bank and Commerce Bank, which have pledged $2 billion, $854 million and $470 million, respectively.

Some needed a bit of prodding, Salowe-Kaye said.

"When a bank says, 'We don't do agreements,' in many instances I convince them they should do an agreement with us," she said.

 

Tip #23

Home Buying Tip, Big Ticket Items:
Before you buy a home you should avoid buying any big ticket items.  When this is found out during the credit process or reporting it can make mortgage banks nervous.

Even if you will be able to get a loan, you might not be able to get the best available interest rate.

 

Tip #24

Home Selling Tip, Listing Right:
A common mistake when people list their house (especially in a buyers’ market) is list the house at a high price that they don’t anticipate to sell it at.  They figure that if they get it then GREAT but if not they can always lower the price.

This is not a good practice because what mostly happens is it will stay on the market for a while and make potential home buyers nervous because it’s been on the market so long.