The New York Fed published a paper on Sub Prime Mortgages in New Jersey and the data is quite enlightening. The first Table depicts the defaults as of August 2008 by state and shows that New Jersey if 5th in ratio of sub-primes in foreclosure on the basis of total homes. Namely the Table states that NJ has 3 of 1,000 housing units in foreclosure as compared to 6.2 for Florida and 4.6 for California.
Now the details of the counties can be shown in the following map. The highest foreclosures were in Union, Linden, Irvington and Plainfield. All of these towns have a well established housing base and are major Democratic strongholds. They are used again and again for carrying the New Jersey Democratic vote. Other counties, especially Republican counties account for only 64 of the 10,500 foreclosures!
The third Table depicts the default by Zip codes. The green boxes are zip codes where 75% or more of the sub prime loans are foreclosed. This is for Essex County. This is a county of older houses as is Union and the problem is clearly one of providing mortgages to people who clearly cannot afford them.
In addition, this was the Congressional District of Senator Robert Menendez before he went to the Senate. He pressured the banks to lend the funds and as seen in the following chart the lending went to those least able to afford them. 75% of the defaults were in ten zip codes! This was not a county as one finds in Florida or California where there was a great amount of new development. In fact there has been little or no development here in fifty to seventy five years. These were houses with well defined prices that were flipped and sold to those who clearly could not afford them, apparently driven by very strong political pressure.
Our observation and possibly conclusion is that the Democrats through their influence may have actually created circumstances which led to this collapse. The data at least for this part of New Jersey appears to bear this out.
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