Foreclosure Crisis in New York

May 28th, 2008 | Tags: Foreclosure Crisis

The foreclosure crisis in New York City is reaching Himalayan heights. Ten years ago Queens Supreme Court reported a maximum of 400 foreclosures in a year. But in 2007 the number skyrocketed to 7,500. In 2008 already the court is set to handle 10,000 foreclosure suits. It is feared by Pew Charitable Trusts that in the forthcoming years New York will see a foreclosure rate of 1:32.

The hardest hit will be Queens, Brooklyn, Bronx and Staten Island. In 2007 Queens was responsible for 40% of the total foreclosures in the state. The figure does not include Co-op foreclosures as these are governed by a different rules and regulations.

The foreclosure meltdown is gaining more attention, as the election fever gets hotter. There are many personal tragedies involved apart from the sub-prime mortgages. To add to the woes of New Yorkers the foreclosed units are not selling. This is leading to a slump in the real estate market that is affecting all – whether foreclosed or not. The banks are failing to sell off the repossessed units and the net result is that the state is dotted with vacant properties.

The situation in the locality a few blocks away from South Jamaica courthouse reflects the condition in the entire state. Here there were 32 foreclosed houses in this five-block locality. All were lying vacant. A vagabond moved into one, broke a window and threw garbage on the yard. Another became a crack house with a mixture of drug abusers of all ages. Grim predictions are being made about the future. It is a repetition of the 1970’s when entire blocks were stripped, comments Sarah Gerecke of Neighborhood Housing Services.

Foreclosures are bad for all concerned or unconcerned. The borrowers lose the house that was their home and gain a bad credit mark. Lenders are badly mauled by the foreclosure costing something around $58,759 including loss of interest as well as court and other incidental fees. The public ultimately bears the cost with property values falling, crime rate increasing and other governmental costs to maintain law and order. For every foreclosure the property value goes down by 1% within a radius of 1/8th mile of the foreclosed house. Thus even regular payers of mortgage dues are hurt by foreclosures for no fault of theirs. Government tax kitties fall with drop in property sales. However it seems that foreclosure prevention programmes are beginning to have some impact on the scene.