The Crippling Foreclosure Crisis

A survey of elected local officials shows that the recent increase in foreclosures has significantly increased vacant properties, homelessness, and crime while decreased city revenue.
The National League of Cities surveyed 211 officials through online and e-mail questionnaires, and 67% of those surveyed reported an increase in foreclosure in their respective cities. 33% reported an increase in vacant properties and decrease of local revenue.
Cynthia McCollum, President of the National League of Cities and Councilwoman of Madison, Alabama said, "There's a reduction in revenues at the same time that more services are needed. Because of foreclosures, people are stealing, crime is on the rise and we don't have more money for cops on the street."
20% of city officials polled reported an increse in homelessness.
When the National League of Cities meets with Congress, the foreclosure crisis will be the main topic of discussion.
James Mitchell, a Charlotte Councilman and head of the National Black Caucus of Local Officials, said, "The American dream for individuals has now become the nightmare for cities."
He reports that there has been an increase in police calls because abandoned properties are targets for vandalism.
Mitchell also claimes that in Peachtree Hills, a Charlotte suberb, 115 of 123 homes are in foreclosure.
He says, "The 12 residents left there can't sell their homes and now their property values have decreased. It's starting to be a symbol of what we don't want to happen to Charlotte."
Many of the homes where sold to African-Americans enticed by zero down mortgages and low priced housing. The survey shows that people of color, single parents, and senior citizens are being disproportiantely affected by the foreclosure crisis.
Even cities that have been spared from the worst of the crisis are experiencing serious ramifications.
The heart of California's Inland Empire, Riverside, ranks 4th nationally in foreclosures. The area attracted people from the costlier coastal area, but the housing boom had little affect on Riverside. However, the communities to the East were more severley affected.
Riverside Mayor Ronald Loveridge says, "It's having a ripple effect on our budget and city finances. Housing industry is not simply building homes. There's less money being spent for new cars. That's had a powerful effect on the economy of our region."
Since the 1978 passage of Proposition 13, which caps real estate taxes, California cities rely heavily on sales tax revenues. Riverside is facing a $12 million defecit this fiscal year.
Loveridge says, "We handle that essentially by not filling positions."
Riverside is adjusting the payment schedule of development fees to encourage construction. Also, it passed an ordinance requiring the upkeep of homes in foreclosure.
The Department of Housing and Urban Development is working with Charlotte on a program that allows teachers, firefighters, and police officers to buy foreclosed homes at 50% of the listed price.