The fallout of those crippling subprime mortgages offered by unscrupulous real estate brokers and predatory lenders has severely impacted our communities, as vacant, deteriorating properties precipitate increased fire hazards, facilitate criminal activity and depress our property values.A recent study conducted by the Center for Responsible Lending estimated that a residential mortgage foreclosure lowers the price of other nearby single-family homes by 0.9 percent and the downward pressure on housing prices persists to houses that are sold up to two years after the foreclosure, and directly corresponds to an increase in neighborhood violent crime by approximately 6.7 percent. Homeowners living near foreclosed properties will see their property values decrease by $5,000 on average per each foreclosed home.New York City property values are likely to decline by 20-25 percent within 18 months.
The Neighborhood Preservation Act, which passed the state Senate, but is pending passage through the Assembly before it can become law, will protect neighborhood safety and mitigate the ills wrought by abandoned homes. Queens accounts for 8.8 percent of the state’s foreclosure filings this year and 34.2 percent of filings for New York City alone. Foreclosure rates in Queens, the most affected county in the state, jumped 91 percent in the first quarter of this year. As a result, the median home price in Queens dropped over $100,000 from Feb. 2007 to Feb. 2008, from $390,000 to $283,665.
This legislation will create a standard of safety and habitability for bank owned homes which are foreclosed and vacant, and empower municipalities to use their discretion in how they choose to secure and clean up these unsightly residential properties. They will be reimbursed for their work, whether by issuing violations or through legal action, or by billing the errant bank.
If this law is passed, banks can be made accountable for such conditions as inadequate security (for example, failure to provide locks and secure the premises), substantial accumulation of garbage, severe infestation of insects and rodents, graffiti and sewage leaks and spills. Hitherto, there has been a shameful lack of responsibility on the part of the banks that have destroyed the American Dream of home ownership, resulting in a decrease in our quality of life. Foreclosed properties have degenerated into havens for frequent delinquent behavior by trespassers, gangs and other criminals.
In May, 2008, the chief architect of this law, state Senator Jeff Klein, released a report which found that in New York State alone, there are 3,552,642 homes which have experienced devaluation in 2007 due to subprime foreclosures. Bleak, indeed! This act will be a much needed safety valve as we rebuild and preserve our communities, and we should all call our Assembly representatives to make it a reality.
Albert Baldeo is a community advocate and former state Senate candidate for the 15th State Senate district.
