New York state has the second highest home foreclosure rate in the nation, with 1 in 21 home mortgages in foreclosure, according to a report released today by State Comptroller Thomas P. DiNapoli. The continuing foreclosure challenge is squeezing municipal budgets when property values decrease, tax bases shrink and crime jumps.
“Our communities are paying a big price when people lose their homes,” DiNapoli said. “We must continue efforts to help homeowners and implement solutions that support local governments’ economic recovery.”
DiNapoli’s report noted that some changes made to New York’s foreclosure process to help borrowers avoid foreclosure has drawn out the process, increasing costs for individuals and municipalities. This is particularly problematic when it contributes to increasing the number of vacant abandoned properties, which have come to be known as “zombie homes.” In these cases, municipalities may end up with not only delinquent taxes, unpaid water and sewer bills, but homes that become safety hazards and require demolition.
Communities on Long Island and the Hudson Valley saw the biggest hit to their tax bases in the wake of the last recession. Many counties saw the taxable full value of properties fall by almost 23 percent from 2008 to 2013 (see figure 6) after increasing 60 percent or more from 2003 to 2008.
A report issued by DiNapoli in August found these same counties on Long Island and in the Hudson Valley had the greatest number of pending foreclosures, with the number of such cases rising 63 percent from 25,097 in the beginning of 2013 to 40,985 in first part of 2015.
DiNapoli urges that efforts continue to reduce the backlog of foreclosure cases, and legislative options be considered if voluntary efforts by financial institutions to reduce the impact of zombie properties on local communities fail.
Read a Foreclosure Update from a Local Government Perspective, or go to: http://www.osc.state.ny.us/localgov/pubs/research/foreclosure0416.pdf
Read the August 2015 report The Foreclosure Predicament Persists, or go to: http://www.osc.state.ny.us/localgov/pubs/research/snapshot/foreclosure0815.pdf