TRENTON -- Is New Jersey's sky-high foreclosure rate actually the answer to its affordable housing crisis?

Phil Murphy thinks so.

The Democratic front-runner for governor has unveiled a new plan he says would take New Jersey from first in the nation in foreclosures to near first in the nation for affordable housing, courtesy of Wall Street's banks.

"Wall Street created the foreclosure crisis," Murphy said. "They need to be held responsible for fixing it."

New Jersey leads the nation in defaulted mortgages, with some 1.9 percent of housing units in New Jersey in some stage of foreclosure -- nearly triple the national rate of 0.7 percent, according to ATTOM Data Solutions.

In Atlantic, Camden, and Sussex counties, the foreclosure rate is quadruple the national average.

Meanwhile, for the last 16 years, the state has failed to meet its own legally required allotments for affordable housing.

Murphy's solution?

Using hundreds of millions of dollars from of fines paid by Wall Street banks to the federal government to make amends for the subprime mortgage mess to write off New Jersey's bad loans once and for all -- and then use those newly paid-off homes as affordable housing.

"With smart investments, we can create thousands of units of much-needed affordable housing without building a single new building," said Murphy.

Some 85,000 New Jersey homes were foreclosed from the start of the year 2010 and the end of 2016, according to CoreLogic, a realty data firm.

Murphy's plan calls for tapping the Department of Justice's Residential Mortgage-Backed Securities (RMBS) settlement -- a multi-billion reparations account funded by the largest financial fines in the history of the United States -- and then turning them into affordable housing.

Because New Jersey represents 9 percent of the nation's foreclosed houses, Murphy said he would argue the state should receive 9 percent of the DOJ's remaining $7.4 billion in settlement funds -- which amounts to $670 million.

"Making Wall Street pay with the billions they gave up for causing the housing crash would not only ensure fairness for New Jersey's families, but be a measure of justice for their role in creating this crisis that has left our state pockmarked with empty homes," Murphy said.

Another Democratic candidate for governor, state Sen. Raymond Lesniak (D-Union) has been pushing this concept for years, most recently in 2013.

However, Gov. Chris Christie three times vetoed Lesniak's Residential Foreclosure Transformation Act, which would have turned vacant, already-foreclosed properties into affordable housing.

"The danger right now is what Trump's going to do with it," Lesniak said. "I wouldn't trust that that money's going to be there. Seeing what he's done already in terms of the federal budget, it's likelier to be used to fund his war machine."

Trump's initial federal budget, unveiled last week, seeks an additional $54 billion in military spending, at the expense of domestic spending.

Murphy said under his plan, the state would not become a landlord, but partner with local community development corporations to match homes with deserving families.

The former Goldman-Sachs executive's plan was applauded by Staci Berger, the president and CEO of the Housing and Community Development Network of New Jersey, a non-profit that works to support the creation of low- and moderate-income housing.

"It is a great idea to take foreclosed houses and make them affordable homes," said Berger. "If there's money there, we should definitely be receiving our fair share."

Under Christie, New Jersey received $75 million in foreclosure prevention aid in 2011, but the governor instead used it as a stopgap for holes in the 2012 state budget.

Last January, Jessica Brooks, a vice president at the non-profit Boston Community Capital told NJ Spotlight that New Jersey was an especially difficult state in which to work with lenders and borrowers to prevent or resolve foreclosures.

"In the other states where we work, we have governors who have welcomed us and networked us to their housing agencies and counselors," Brooks said.

Murphy said that he was "mystified" that Christie "had failed to fight for New Jersey's share of the funds."

A spokesman for the governor did not return a request for comment, and a spokesman for the U.S. Department of Justice declined to comment.

Berger admits the plan is not without challenges. Many of the foreclosed homes are in poor shape after years of neglect, she said.

"And some of them are McMansions that couldn't ever be affordable" homes.

Derek Roseman, a Murphy spokesman, notes that in the foreclosure-addled Atlantic City metro area -- the highest of any metropolitan area in the nation at 3.4 percent -- the average price of a foreclosed property in Atlantic County is around $13,500.

"That means the state of New Jersey could buy every single foreclosed property in Atlantic County for just $54 million," Roseman said.

He added that Wall Street's banks would likely be eager to resolve the mess.

"They don't like paying the property taxes," Roseman said.

Claude Brodesser-Akner may be reached at cbrodesser@njadvancemedia.com. Follow him on Twitter @ClaudeBrodesser. Find NJ.com Politics on Facebook.