Slams Wall Street For Housing Neglect & Predatory Lending Practices,
Introduces Legislation to Tackle Sub-Prime Fall Out in Suffolk County
Legislator Horsley at a foreclosed home in Babylon Village
Horsley declared, “The greed of Wall Street is so pervasive it has corrupted what was once the attainable American Dream, and instead placed in our neighborhoods a mountain of unrepayable debt coupled with horrendous physical blights that assault our property values. That is why after much consideration and diligent research I have introduced legislation to pursue legal action against the most egregious perpetrators of a deficient, socially toxic subprime loan product that has attacked our quality of life.”
The Math
Suffolk County accounts for over 8,055 subprime loans in foreclosure or over thirty days late, more than any other county in New York State. Nassau County is a distant second accounting for over 4,881 subprime loans in foreclosure or over thirty days late. Making matters worse more than 5,531 subprime mortgages in Suffolk County will reset interest rates before October 2009, thus leading to another round of home foreclosures. To date conservative estimates show that 8,055 foreclosures could reduce Suffolk property values by $1.2 billion, less conservative estimates place the property value loss at a staggering $2.9 billion. Furthermore, recent conservative estimates show that a conventional foreclosure within an eighth of a mile of a single-family home results in a decline of .9 percent in value, while less conservative estimates suggest that each conventional foreclosure within an eight of a mile of property results in a 1.136 percent decline in that property’s value, and that each foreclosure between an eight and a quarter of a mile away results in a .325 percent decline in value.
Financial Impact
As a result Suffolk County has seen a rapid depletion in the strength of it’s tax base. In recent years falling home values have resulted in property tax delinquencies and real property tax deficits. Following years of growth from 2002 to 2004, Suffolk experienced a real property tax decline in 2005 with a 2.3%, or $1.2 million, decline in property tax revenues. Then 2006 yielded a 5.9% or $3 million decline in property tax revenue, and most recently in 2007 Suffolk experienced a 35.7% or $18 million real property tax decline. All of which may have contributed to Suffolk’s $150 million projected operating budget deficit.
Social Impact
Foreclosures can lead to vacant, boarded-up, or abandoned properties. These properties can contribute to physical disorder in a community, create a haven for criminal activity, discourage the formation of social capital, and lead to further disinvestment. The theft of property from unoccupied buildings may be less likely to be reported. It has been demonstrated that higher levels of foreclosures contribute to higher levels of violent crime. Studies generally show 2.8 foreclosures for every 100 owner-occupied properties in one year correspond to an increase in neighborhood violent crime of approximately 6.7 percent. Till now Suffolk has managed to buck this national trend.
DuWayne Gregory, Chief of Staff, (15-LD) stated, “The foreclosure of single-family homes is a serious threat to neighborhood stability and community well-being. Abandoned, boarded up properties contribute to physical disorder that can lead to a haven for criminal activity, discourage the formation of social capital, and lead to further disinvestment.” With 43.4% of 581 loans being subprime, Wyandanch has the highest percentage of subprime loans of any zip code in New York State.
Georgia Westcott, Coldwell Banker Residential Broker, talked about the fall out real estate agents are forced to deal with, “Many abandoned homes go on to be burglarized. Copper pipes and heating systems are ripped out. Everything from granite counters, new appliances and cabinets become attractive to thieves. Safety for real estate agents who show vacant properties has become a vital issue, many agents are forced to employ a “buddy” system to insure their own safety when showing foreclosed homes.”
Horsley concluded, “As it has become crystal clear that Wall Street bears an undeniable responsibility for untold financial and suburban collateral damage I will be working closely with the County Attorney’s office to determine what measures may be executed to force more rapid clean-up and maintenance of foreclosed homes, and what statutes exist to compel clean up of homes in disrepair.”
