November 14, 2007

By J.W. ELPHINSTONE

Boarded windows and a dilapidated porch are seen on a foreclosed home as it sits vacant in Westview Village in Atlanta. Westview’s struggle with foreclosures echoes what other neighborhoods are facing: rising crime and falling property values.

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.

“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 and pipes that can be sold as scrap, he said.

Banks aren’t watching foreclosed properties closely, said Modesto, Calif., Police Chief Roy Wasden.

“As it gets colder, (squatters) will start building fires in these structures and it’s quite dangerous,” he said.

Franklin Reserve resident Susan McDonald said two of the homes on her block were turned into indoor marijuana farms. Both caught fire last summer after the pot growers tapped into the city’s electric grid with faulty wiring.

But McDonald, who has lived in the community for three years and is president of the residents’ association, jokes that they make better neighbors than some.

“The pot growers, they mow their lawns, they take out their garbage,” said McDonald, an executive at a local bank. “There’s
been gang activity. Things have really been changing the last few years.”

Crime reports in Franklin Reserve rose 45 percent in May, to 100 from 69 in the same month last year, but record-keeping changed when Elk Grove created its own police force in August 2006, said Officer Chris Trim, spokesman for the Elk Grove Police Department.

To deter crime, the community policing unit is charged with working with code enforcement officers on problems such as unkempt homes and patrol officers swing past vacant homes as part of their normal duties. But there has been no increase in police budget, overtime or staff as a result of the empty homes.

Meanwhile, the neighbors are doing what they can. One Sunday last month, two dozen church members gathered their lawn mowers and weed trimmers and cleaned up 27 vacant homes.

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