A recent study conducted by the Center for Responsible Lending (CRL) 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 on houses that are sold up to two years after the foreclosure, and directly correspond 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. Whereas foreclosure rates for the entire city jumped 60 percent in the third quarter of 2008, New York City property values overall are likely to decline by 20 to 25 percent in the next 12 to 18 months.
The Neighborhood Preservation Act, which passed the State Senate, but is pending passage in the Assembly before it can become law, will protect neighborhood safety and mitigate the ills wrought by abandoned homes. Our pleas will finally be answered in this regard, and we thank the State Senate for its initiative in approving this bill. Queens accounts for 8.8 percent of the state's foreclosure filings this year and 34.2 percent of filing 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 February 2007 to February 2008 from $390,000 to $283,665.
This legislation will create a standard of safety and habitability for bank-owned homes that are foreclosed and vacant, and empowers 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 - the most appropriate and preferred method.
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, targeting and tormenting otherwise quiet and family oriented neighborhoods.
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 sub-prime 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 District, which encompasses Glendale, Howard Beach, Maspeth, Middle Village, Old Howard Beach, Ridgewood, Woodhaven, Ozone Park and Richmond Hill.