Foreclosure Poses Staggering Economic Risk to NYC Communities of Color

Is the foreclosure crisis a racial justice crisis?

A report from the office of State Senator Klein indicates that 80% of homeowners at risk of foreclosure are in communities of color:

"Of the 29,729 homeowners who have missed multiple mortgage payments as of last month, 10,308 are from Brooklyn, the report says.

New York State Senate Of the 29,729 homeowners who have missed multiple mortgage payments as of last month, 10,308 are from Brooklyn, the report says.

Another 10,060 live in Queens, 4,408 in the Bronx, 4,110 on Staten Island and 843 in Manhattan.

Klein’s report also finds that 80%, or almost 24,000, of those in preforeclosure are from minority communities across the city."  (link)

The report also notes the high cost of a foreclosure to surrounding homes nationally:

"This is an average rate of $23,157.89 in home equity lost for each surrounding property. An even higher rate was seen for [m]inority neighborhoods who lose an average of $40,297 of their property’s value." (link)

The report finds the potential lost tax revenue and home equity in NYC communities of color is staggering:

"Should the properties foreclose minority neighborhoods would experience losses of $64 million in property taxes and $13 billion in home equity." (link)

Below is an overview broken down by borough:

While the report somewhat overstates the numbers because its calculations assume that all those at risk of foreclosure will go into foreclosure, at a minimum, it underscores the urgent need to support (i.e. fund) counseling and legal representation for those at risk of foreclosure.

The full report can be found here.

Mandatory Foreclosure Conference Extension Bill Passes NY Legislature

The New York legislature has passed legislation extending important protections for New York homeowners in foreclosure for an additional five years past their February 2015 expiration date.  Many advocates (as covered here) had argued stridently for passage of this bill, which now awaits the signature or veto of Governor Cuomo.

As explained in an email blast from the the Empire Justice Center:

Dear Friends,

Empire Justice Center is thrilled to share the news that the  State Legislature has passed critical legislation that will ensure that New York homeowners have access to settlement conferences for another five years.  The conferences have been invaluable and have prevented thousands of New Yorkers from losing their homes once a foreclosure case is filed against them, as had previously been happening prior to the institution of the settlement conferences.

Since 2010, lenders and homeowners in all residential home loan cases have been required to meet to see if the parties can reach a mutually agreeable resolution, such as a loan modification or other workout, to avoid loss of the home.  Unfortunately, the numbers project record high foreclosures still to come in New York.  The continuation of the settlement conferences, as well as continuation of an early warning notice to homeowners in default and a notice to tenants in buildings being foreclosed upon, are vital consumer protections that will remain in place.  We especially want to thank Senator Jeff Klein and Assemblymember Helene Weinstein, for sponsoring and championing these vital consumer protections five years ago and ensuring their continuation this year.

Kudos to them, to the NYS legislature, and to the many consumer advocacy groups that worked to support the passage of this bill.

In solidarity,

Kirsten E. Keefe, Senior Attorney

Additional coverage by the Daily News here:

"Senate Co-Leader Jeffrey Klein (D-Bronx/Westchester) announced Wednesday that the State Senate voted 56 - 1 in favor of his legislation that would extend vital foreclosure prevention measures and homeowner protections for an additional five years beyond the February 2015 expiration date. These protections include extending the requirement for lenders to provide 90 notice of foreclosure and mandatory settlement conferences for all home loans. An expiration of these protections would have meant that tens of thousands of New York homeowners in pre-foreclosure were in serious danger of losing their homes. The State Assembly passed the legislation on June 2nd. The legislation now awaits New York Governor Andrew Cuomo’s signature to become law."