November 14, 2007

By BEN VAN DER MEER AND J.W. ELPHINSTONE

The thousands of foreclosed homes in recent years in Modesto present a vexing problem for law enforcement officials, including Police Chief Roy Wasden.

Banks aren’t watching those properties closely, he said.

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

In the Northern San Joaquin Valley and other areas across the nation where foreclosures are soaring, law enforcement officials worry that a rise in crime will follow, particularly in neighborhoods with clusters of bank-owned homes.

California ranks second in the nation with one foreclosure filing for every 88 households, according to RealtyTrac Inc., a foreclosure tracking firm.

Stanislaus, San Joaquin and Merced counties lead the nation in foreclosure rates, by many estimates, and all three counties have several neighborhoods where repossessed homes are common.

In Manteca, the City Council has approved rules that would fine homeowners who allow vacant homes to fall into neglect. City officials in Modesto and Ripon have looked at similar measures to address a spate of foreclosed homes that have become rundown or otherwise a nuisance.

Crime is on the rise in Elk Grove, where thousands of homes were built during the housing boom.

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

During the boom, the Sacramento suburb sprouted 10,000 homes in four years, attracting investors from the Bay Area. Now many houses stand empty, weeds overtaking lawns, signs lining the street: “Bank Repo,” “For Rent,” “No trespassing — bank-owned prop-erty.” A typical home’s value has dropped from about $570,000 to the low $400,000s.

By one study, when the foreclosure rate increases 1 percentage point, a neighborhood’s 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,” said Dan Immergluck of the Georgia Institute of Technology in Atlanta, who wrote the report with Geoff Smith of the Woodstock Institute in Chi-cago.

Immergluck said his report shows that, historically, the areas most affected by foreclosures were lower-income and were prone to subprime and preda-tory lending, irresponsible house flipping and mortgage fraud.

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.

The homeowners sometimes have no options but to accept any renters they can get, said Norm Schriever, a real estate and loan agent in Elk Grove.

“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 have looted some empty homes, stripping them of electrical appliances or copper wiring and pipes that can be sold as scrap, he said.

Franklin Reserve resident Su-san McDonald said two of the homes on her block were turned into indoor marijuana farms. Both caught fire 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 resident 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 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 cre-ated 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 drive 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.

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.

“We had weeds that were almost eye-level high,” said Steve Steele, pastor of the Tree of Life Community Church. “If no one was home, we just kind of did it good Samaritan style.”

Eighty-five bungalows dot one cul-de-sac in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure. Now fires, prostitution, vandals and burglaries terrorize the residents left in the historic Westview Village neighborhood.

“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 mort- gages made to borrowers with spotty credit and adjustable-rate loans, more people are noticing that their neighbors are caught up in the meltdown. The effects aren’t confined to low-income or redeveloping communities; they are seeping into middle-class neighborhoods and new developments.

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