STUDY SHOWS COSTS TO SAN DIEGO NEIGHBORHOODS AND LOCAL GOVERNMENTS CAUSED BY FORECLOSURES

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July 16, 2011 (San Diego) -- Home foreclosures in the City of San Diego are costing local governments hundreds of millions of dollars, in addition to billions lost by neighboring homeowners, a study by the Center on Policy Initiatives shows.  

The report, Foreclosure: the Cost Communities Pay, projects almost 57,000 foreclosures in San Diego over five years, and recommends the City take action to hold banks accountable for the resulting costs.

"The foreclosure crisis is clearly devastating to families who lose their homes, but it also has a huge financial impact on neighborhoods and local governments," said CPI Research and Policy Lead Corinne Wilson, author of the report. "We need to find solutions to recover some of those costs from the banks that cause the problems." 

When banks leave homes vacant and in disrepair, neighboring property values decline, property tax revenue is lost and the city must pay for upkeep, code enforcement and police services. 

A single foreclosure can cost local governments $5,000 - $34,000 in maintenance, inspection fees, public safety calls and other services. In San Diego, those costs have totaled between $134 million and $855 million over the five years since the crisis began in 2008, the study found.

In addition, the lost property tax revenue from San Diego foreclosures is estimated at $117 million, and the combined wealth lost by owners of foreclosed homes and neighboring homes is more than $19 billion.

At a press conference, Barrio Logan resident Gabriela Castellanos said the half-dozen foreclosed houses on her street create a fire hazard with overgrown weeds, are infested with rats and roaches, and sometimes are vandalized or used for prostitution and drug abuse. 

"This is a very serious crisis," said Castellanos, whose four young grandchildren live in the neighborhood. "The banks have a big responsibility. If they close these houses, they have to take care of these things."

The report provides data on lost home value and costs for all zip codes in the city. It recommends remedies that include holding banks accountable for those neglected properties, with fines or penalties to cover the costs generated by nuisance properties. 

The 4-page report is available on CPI's website, at  www.onlinecpi.org/foreclosurecost.


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Comments

This is really true, as of

This is really true, as of now we are suffering from foreclosure crisis. I can feel it because I am a landlord here in Texas as of now i increase my rental rates for 10% because we all know that we are suffering from economy crisis. And because of this i had to force my tenants to add there rental fees. If I am not going to do that I will be forced to close my business. Like the article said, The outcomes of the property collapse have been wide-ranging and difficult to parse. Several people, cities, and towns have been affected. Many people that lost their homes have turned to renting, which is flooding the market. The federal government is looking for suggestions on how to rent out many or all of the 250,000 foreclosed-on, empty homes that it is at least part owner of. I read this here: US Government considering renting out foreclosed homes

Based on the report, it shows

Based on the report, it shows that one in every 497 homes received foreclosure filings during the month. Five states continued to account for more than half of all filings of foreclosure. California only accounted for more than one quarter.

Source: Las Vegas Foreclosures

Local Foreclosure Costs

The banks should be held responsible for the upkeep of foreclosed homes. They are not willing to rent them after homeowners were forced out as "they don't want to be landlords" and they are not willing to work with the homeowners in any attempt to salvage their purchase. I have relatives who lost their home, with Chase as their lender, after being asked to provide the same paperwork, 5 months in a row, to show how badly off they were financially. This was after having 2 short sale offers with buyers who were completely financially able to buy. The buyers backed away because the bank took too long to approve and they moved on to similar houses. It's not like there is any shortage, in any neighborhood, of empty homes to be be purchased.

Where is the wisdom of collecting no money for years, with apparently, in many cases the cities picking up the tab for this nonsense (upkeep, lost taxes, etc.)? I understand the concept of not saturating the existing market with empty houses but as this article states, many of them have become eyesores and a danger to the community they are in. Another thing, if you go on real estate websites, are the number of houses that are "cash only" because of the condition. Many of these are the exact same type of properties, that were being financed 2 and 3 years ago. Of course, they are total fixers, but how many people do you know that have $150,000 to $200,000 cash to buy something that is still not liveable.

The banks, with help from our wonderful government, created this problem by lending to many people who should never have been allowed to buy houses at prices that should never have been allowed to happen.