November 14, 2007


Eighty-five bungalows dot the cul-de-sac that joins West Ontario Avenue and East Ontario Avenue in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure. Now house fires, prostitution, vandals and burglaries terrorize the residents left in this historic neighborhood called Westview Village.

Locks and spider webs are seen on the entrance door of a foreclosed home as it sits vacant in Westview Village, Saturday, November 3, 2007 in Atlanta. The tale of Westview’s struggle echoes what other neighborhoods with a significant number of foreclosures are facing: rising crime and falling property values.

“It’s created a safety hazard. And if we have to sell our house tomorrow, we’re out of luck,” said resident Scott Smith. “Real estate agents say to me ‘We’re not redlining you, but I tell my clients to think twice about buying here.” ‘

As defaults surge on mortgages made to borrowers with spotty credit and adjustable-rate loans, more people are noticing that their neighbors are caught up in the meltdown. Their misfortunes are haunting those left living on the same streets. The effects aren’t confined to just low-income or redeveloping communities; they are seeping into middle-class neighborhoods and brand new developments.

Smith, the vice president of Westview Community Organization Inc., keeps a map of the area, tracking each vacant property and notifying local officials when nefarious activity is suspected.

Georgia has the eighth largest foreclosure rate in the nation, one filing for every 142 households, according to a third-quarter report from foreclosure tracker RealtyTrac Inc. Nevada has the worst rate with one filing in every 61 households, while the nationwide rate is one filing for every 196 households.

“They’ve seen a lot of prostitution in the area, vagrants wandering in and out of the empty houses and drug activity,” said Officer Dakarta Richardson of the Atlanta Police Department. “Some people that I talked to are afraid to walk out of their homes at night.”

Some other people in the area have been affected by break-ins, and there have been house fires in several of the vacant homes in the past year, Richardson said.

The rise in crime in Westview is typical of a neighborhood struggling with numerous foreclosures, according to a recent study by Dan Immergluck of Georgia Institute of Technology in Atlanta and Geoff Smith of Woodstock Institute in Chicago.

That study showed that when the foreclosure rate increases one percentage point, neighborhood violent crime rises 2.33 percent.

“The key here is the concentration of those foreclosures at a neighborhood level. When you have more than one foreclosure in a few block area, that’s when you start to think about the effects on property values and the effects on crime,” Immergluck said.

A report published Tuesday by the Center for Responsible Lending, a Durham, N.C.-based consumer advocate, estimates that 44.5 million U.S. households will see their property values decline a combined $223 billion as foreclosures surge in coming years, particularly in minority communities.

Historically the most affected areas were lower-income and were prone to subprime and predatory lending, irresponsible house flipping and mortgage fraud, Immergluck said.

However, “the problem now is on a different scale,” he said. “It’s affecting a lot more suburban, moderate-income places” as more people of different incomes default on riskier loans.

In the Franklin Reserve neighborhood of Elk Grove, Calif., full of subdivisions with half-million dollar homes, homeowners are fighting inner-city problems like gangs, drugs, theft and graffiti.

During the boom, the suburb just south of Sacramento sprouted 10,000 homes in four years, attracting investors from the San Francisco area. Now many houses stand empty, weeds overtaking lawns, signs lining the street: “Bank Repo,” “For Rent,” “No trespassing – bank owned property.” A typical home’s value has dropped from about $570,000 to the low $400,000s.

California ranks second in the nation with one foreclosure filing for every 88 households, RealtyTrac said. The homeowners sometimes have no options but to accept any renters they can get, said Norm Schriever, a local real estate and loan agent.

“You get some bad renters in there and the weeds start growing and a few windows are broken and it starts descending into a feeling of chaos,” he said.

Thieves also have looted some empty homes, stripping them of electrical appliances or valuable copper wiring, he said. Banks aren’t watching foreclosed properties closely, said Modesto, Calif., Police Chief Roy Wasden.

RealtyTrac reported that Ohio is fifth in the nation with one foreclosure filing for every 107 households.

The city repairs vacant homes if recalcitrant owners won’t, bills the owner and, if unpaid, a lien is filed. So far this year, the city has spent $800,000 to fix up 44 properties, up from $500,000 in 2006. Typical repairs include fixing roofs and painting

Additionally, before a house is sold, it must pass a housing inspection, which includes a repair-cost escrow requirement created in 2000.

This encourages owners of vacant or foreclosed properties to make repairs, said Kamla Lewis, director of neighborhood revitalization.

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