NYC braces for foreclosure surge

New York Foreclosure & Real Estate News

By: Tom Fredrickson
 

The number of New York City homeowners facing foreclosure is on track to reach the highest point in more than a decade.

Lenders have started foreclosure actions on 7,000 homes since January, according to the Neighborhood Economic Development Advocacy Project. By the end of the year, the number is expected to exceed 14,000, which would represent a 60% increase over 2006.

"We have to brace ourselves," says Sarah Ludwig, NEDAP's executive director. "It's going to get worse before it gets better."

Fueling foreclosure filings is a rise in the number of subprime, adjustable rate mortgages that are poised to reset in the next six to 18 months. When that happens, many homeowners will face mortgage payments that are hundreds of dollars more every month and some will be forced to sell or will lose their homes in foreclosure. As a result, the fragile middle-class presence in neighborhoods where bad loans are concentrated is in jeopardy.

Three of the hardest hit neighborhoods are in Brooklyn, according to NEDAP: Bedford Stuyvesant, Flatbush and East New York. Two are in Queens: Rochdale and Jamaica.

Agencies and housing groups are trying to dam the foreclosure flood. On Friday, the State of New York Mortgage Agency unveiled a $100 million program to help homeowners at risk of foreclosure refinance their loans. However, such efforts are likely to fall short given the size of the problem. The state program has enough money to help only about 500 homeowners statewide and owners of multiple-family homes, which are popular in city neighborhoods, are not eligible.

Meanwhile, housing counseling agencies are getting flooded with requests for help. Neighborhood Housing Services of New York Inc., one of the major agencies that counsels homeowners, is getting about 800 calls per month, up from 300 calls per month a year ago.

Whether homes are lost through forced sales or foreclosures, the result is the same: deteriorating neighborhoods. Already, signs of decay are showing up in some areas, housing advocates say.

"You find if you drive through these neighborhoods that they are starting to show signs of deferred maintenance one some single-family homes," says Sarah Gerecke, NHS executive director. "That is something that we have not seen in years. The fact that they are less well tended is a real sign that people don't have the resources to stay in their homes."

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