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Thousands of “zombie homes” continue to blight communities across New York, but housing advocates are praising the Assembly’s recent passage of legislation that would go a long way toward attacking the problem.
But some policy experts also say the legislation, which now faces a battle in the Senate, provides only some solutions to the problem. They say it will take a “blend” of legislation to prevent and maintain vacant and abandoned properties, as well as assist local municipalities with dealing with them.
Empire Justice Center’s Kirsten Keefe created a “blueprint” of active legislation that could do so. Here are five key pieces:
- The Abandoned Property Neighborhood Relief Act (A.6932A/S.4781A): This bill, introduced by Attorney State General Eric Schneiderman, was approved by the Assembly last week and would require banks and other mortgage lenders to maintain properties during the foreclosure process, which in some cases can take about three years. It will also create a state public registry, and it authorizes localities to take enforcement action. Fines of up to $1,000 per day can be levied for properties that aren’t properly maintained.
- The Community Restoration Fund: This fund would help avert foreclosures by acquiring distressed properties at a discount and passing on the savings to homeowners through affordable modifications, where possible. In cases where there is no feasible debt restructuring, the Fund could instead help a homeowner find new housing and then rehabilitate or demolish the property depending on the needs of each neighborhood. The Center is a member of New Yorkers for Responsible Lending, a coalition of statewide housing groups that is supporting the fund.
- Zombie Remediation Act of 2016 (A.9655/S.7295): This legislation would allow municipal governments to compel banks to complete foreclosure proceedings or discharge the mortgage for any certified abandoned property.
- Land bank legislation (A.7848/S.5776): Allow land banks to enter abandoned properties and examine them with the possibility of acquiring them.
- Mandatory settlement conferences: (A.1298/S.5242): The legislation makes mandatory settlement conferences more efficient in an attempt to avoid foreclosures that lead to abandonment of properties.
For a fuller description of the bills, and their potential impact, check out this chart from Empire Justice Center:
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For many homeowners working to get a loan modification, just staying on top of deadlines and paperwork can be tedious, complicated, and overwhelming — even when they are working with a professional housing counselor.
That’s why the Center for NYC Neighborhoods is partnering with Neighborhood Housing Services of Bedford-Stuyvesant on an innovative one-year pilot program to assess whether routine text-messages to clients’ mobile phones about their loan modification can “nudge” them toward being better stewards of their own financial decisions. These text-message prompts are combined with traditional face-to-face housing counseling or phone calls from the counselors.
The concept is based on a growing body of academic scholarship in behavioral economics that looks at methods of encouraging people through small, purposeful interventions in their daily activities. American economist Richard Thaler popularized the use of behavioral economics with his best-selling book “Nudge: Improving Decisions About Health, Wealth, and Happiness.” New Yorkers are probably most familiar with how behavioral economics are applied through the City’s efforts to reduce exposure to foodborne illness through its system of letter grades for restaurants. In that case, the letter-grade system acts to nudge consumers toward restaurants that are likely to have been well maintained, generally sanitary, and therefore safe.
Applying such interventions to financial skills — such as paying down high-interest credit cards or making regular savings deposits — is a growing field of practical inquiry.
Carolee Lewis of Jamaica, Queens, is one of the clients at NHS Bed-Stuy who has agreed to participate in the pilot program, which runs through September. The 71-year-old retired registered nurse approached the organization after her home went into foreclosure in the fall of 2015. NHS Bed-Stuy recommended a loan modification.
She said receiving text messages on her cell phone has eased the process, especially since she lives far from the offices of NHS Bed-Stuy.
“It reminds me of what’s going on, what they are about to do,” said Lewis, who has already received four text prompts through the program that officially launched in March. She says the organization also notifies her of workshops she might be interested in and makes it easy for her to respond to messages.
“It’s easier to text,” she said. “Sometimes they’re busy, and they can’t call me right away.”
Some example text prompts to clients in the program may include messages such as “Call your mortgage servicer to verify receipt of application for modification” or “Reminder from NHS Bed Stuy: Submit bank statements and pay stubs to us.”
A pair of researchers were hired to design and analyze the pilot program, with the aim of collecting data that will help to evaluate whether text-message “nudges” can be effective and integrated into future foreclosure counseling.
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One of the few guaranteed methods for lowering increasingly expensive homeowner flood insurance is to elevate homes, but there is little public funding to help pay for the costly retrofits.
But in a much-praised move, the State has announced a $7.5 million pilot program that will elevate homes owned by lower- and middle-income families in low-lying areas of Staten Island and Gerritsen Beach and Sheepshead Bay, Brooklyn, completely free of charge. The deadline to pre-apply is May 15, 2016.
Eligible homeowners must not have received elevation funds from other programs; they must live in the 100-year floodplain; and they must be able show their homes were damaged by Hurricane Sandy but still habitable.
To learn more about whether you’re in the floodplain, your flood risk and about flood insurance rates, go to FloodHelpNY.org
The primary goal of Project UPLIFT is to safeguard homes in surge-vulnerable neighborhoods from future storms. But elevating homes will also save families tens of thousands of dollars in flood insurance. Homeowners are seeing increases in their flood insurance payments of between 5 and 25% this year alone. Those rate increases have become a financial burden to the tens of thousands of low- and middle-income families who live along the 520 miles of New York City waterfront.
Even more alarming, for the first time this year, homeowners who have allowed their flood insurance policies to lapse more than 90 days will have to reinstate them at the higher full-risk rate, which will likely mean paying out thousands of dollars more to cover their homes.
Follow this link to apply for the program: Project UPLIFT
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The handwritten note was posted at what appeared to be a long abandoned home in East New York. “Dear property owner,” the sign read in black ink, “I am interested in buying your property ALL CASH.”
Throughout the neighborhood, and in communities that have increasingly attracted the interest of developers from the east Bronx to southeast Queens, such signs have become commonplace. Residents of these neighborhoods also complain of aggressive brokers or their proxies going door-to-door offering cash or calling repeatedly with offers to buy out homeowners.
The aggressive speculation has gotten so bad, say residents and some policymakers, that they are calling on the state to impose “cease and desist” zones that would allow homeowners to opt-in to a no-solicitation registry. On Thursday, the New York Department of State plans a hearing in Bayside to hear from the public about a proposal to designate all of Queens such a zone. A previous hearing for a new cease and desist zone in the Bronx was held on April 20.
The state already has a cease and desist law, but it’s been at least a decade since any part of New York City has been declared a cease and desist zone. State Sen. Tony Avella is sponsoring a bill that would designate all of Queens such a zone for 10 years. “Our residents have the right to enjoy the peace and quiet that our borough is known for, and that includes peace and quiet from obnoxious solicitations,” Avella said in a statement.
Another state senator, Jeff Klein of the Bronx, is also supporting the re-establishment of cease and desist zones in the city because of “unsavory brokers.” “They try to stir people up to get them to sell,” said Klein to the Bronx Times. “The over-solicitation always worries people.”
Aggressive real estate speculation can also have longterm consequences for affordability in these neighborhoods, since buyers often flip homes to make a profit, inflating home prices and making it more expensive for renters in small homes.
As part of its East New York rezoning deal, the City agreed to “support the community’s efforts to study the feasibility of establishing a Cease and Desist Zone.”
The real estate industry is paying attention. In a post on its website about the hearing, the Long Island Board of Realtors called on its members to turn out and to let the [Department of State] know that “we will not give in to this unfair targeting of our industry.”
The Board also proposed talking points for its members. The zone, one bullet-point read, “will have a severe impact on REALTORS® ability to make a living as they rely heavily on advertising to acquire listings.” Another reads, “Our solicitations are always courteous and provide homeowners with valuable information about recent home sales and values in the neighborhood.”
But it’s clear that residents in many of the neighborhoods where speculation has dramatically increased in recent years are growing tired of the constant inquiries and sales pitches.
Michael McNerney, the president of the Country Club Civic Association in east Bronx, told the Bronx Times that solicitations to homeowners are being mailed, dropped off and attached to fences and doors. He said one solicitation included a cake recipe.
“We believe that homeowners should have the right and entitlement to sell their homes on their own terms and their own conditions without being coerced,” McNerney told the Bronx Times.
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While house flipping has become popular entertainment on TV, for many affordable New York City neighborhoods it is a reality show that too often ends with families displaced from their communities.
In neighborhoods like East New York in Brooklyn and Jamaica in Queens, properties that working- and middle-class New Yorkers could once dream of owning are being bought by LLCs and resold, often in a span of a few months, for immense profits.
This fuels displacement as house prices inflate, attracting more affluent residents from outside the community and leaving locals priced out — hallmarks of gentrification. Meanwhile, properties that were once family-owned become income-generating investments for speculators.
The Center for NYC Neighborhoods analyzed the impact of real estate speculation on the owners and tenants of small homes throughout the five boroughs, and found that while house flipping declined after the 2008 housing crash, today it is creeping back up — and making housing less affordable in several Brooklyn and Queens neighborhoods that have long been havens of affordability for working New Yorkers.
“There’s a real rush to make money in our neighborhoods because you can get such a higher return here and what that’s doing is creating these false markets,” Christie Peale, executive director of the Center for NYC Neighborhoods, told NY1.
The Center examined property flipping of 1-4 unit homes in New York City from 2003 to 2015 and found that speculation has become dramatically more profitable in recent years. In 2015, flipped properties produced a median resale profit of $215,000, or a 75% gross return on investment. In some cases, investors saw profits of 200 to 300%.
Not only does this mean that flipping is putting homes out of reach of working- and middle-class buyers, it’s also depleting a vital source of affordable rental units. That’s because investors who buy these small homes, which are often divided into apartments for multiple families, are likely to raise rents to capitalize on the increasing popularity of the neighborhoods.
The Center also found that neighborhoods in Brooklyn and southeast Queens had more flips than other parts of New York City. East New York — a community being reshaped by development as it undergoes a rezoning that the City says will generate more affordable housing in the neighborhood — had the highest number of flips in 2015. Bedford-Stuyvesant in Brooklyn, Jamaica, St. Albans and Springfield Gardens in Queens, also had high numbers of flips.
But Brooklyn is seeing some of the most rapid changes, with higher profit margins than any other borough in the city. Four of the top five neighborhoods with the largest gross returns from flipping were located in Brooklyn. Cypress Hills led all neighborhoods in 2015 with a median gross return of 125%.
Flipping also had a particularly powerful impact on sales prices in the borough. For all 2015 flips in Brooklyn, the median price of the first sales was affordable to family with a low-downpayment mortgage making about $74,000, or 95%, of Area Median Income. However, after the flip, the median price of the second sale was affordable to a family with the same low-downpayment mortgage making $127,000, or 163%, of AMI.
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New York homeowners will be able to tap into expanded financial assistance after Goldman Sachs agreed to a $5 billion settlement over its past lending practices leading up to the Great Recession with a mortgage working group led by New York Attorney General Eric Schneiderman.
Hundreds of millions of dollars in settlement funds will be used to help struggling homeowners, particularly through the State’s Mortgage Assistance Program (NYS-MAP), Schneiderman’s office said.
“These dollars will immediately go to work funding proven programs and services to help New Yorkers keep their homes and rebuild their communities,” the state attorney general said in a statement. “We’ve witnessed the incredible impact these programs and services can have in helping communities recover from the financial crisis.”
“We are pleased to put these legacy matters behind us,” Michael DuVally, a Goldman Sachs spokesman told HousingWire. “Since the financial crisis, we have taken significant steps to strengthen our culture, reinforce our commitment to our clients, and ensure our governance processes are robust.”
Under the settlement, $480 million will go toward families and communities in New York State, specifically for mortgage assistance, principal forgiveness, land banks and land trusts, and the creation and preservation of affordable rental housing.
Those funds will also “facilitate a significant expansion” of the NYS-MAP program that has helped hundreds of New Yorkers so far to restructure their debts and keep their homes, Schneiderman’s office said. Since December 2014, NYS-MAP has helped 668 borrowers to avoid foreclosure. Homeowners apply through a partner organization in the Attorney General’s Homeowner Protection Program. The Center currently administers the program on behalf of the Attorney General’s Office. According to the settlement documents, Goldman Sachs agreed to allocate funds for debt restructuring “consistent with the terms and conditions” of NYS-MAP.
The Attorney General’s Office estimates that several thousand more homeowners could avoid foreclosure with the expansion of NYS-MAP due to the Goldman Sachs settlement.
Schneiderman’s office provided this breakdown of the relief under the settlement: $220 million for debt restructuring; $30 million for land banks and land trusts; $30 million for code enforcement; $150 million for first-lien principal reduction; and $50 million for the creation and preservation of affordable housing.
The settlement was negotiated by the Residential Mortgage-Backed Securities Working Group, which previously reached agreements with J.P. Morgan Chase, Bank of America, Citibank and Morgan Stanley.
To learn more about NYS-MAP, homeowners can reach the Center by dialing 311 in New York City and asking for the Center for NYC Neighborhoods or by dialing 855-HOME-456.
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For the second year in a row, many homeowners in New York City and across the country will get hit with another costly increase to their flood insurance premiums starting April 1, 2016, when their policies begin to be renewed. And, for the first time, homeowners in the high risk flood zones whose policies have lapsed for more than 90 days will have to reinstate them at the higher full-risk rate — which could mean thousands of dollars in additional costs.
New Yorkers are particularly affected by the new flood insurance rules under the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act that the U.S. Congress passed in 2014. New York City, surrounded by 520 miles of waterfront, has more residents living in high-risk flood zones than any other city in the United States. Unlike most other coastal communities, the vast majority of New York City’s waterfront homes were built long before the National Flood Insurance Program’s flood maps for New York City were put in place in 1983 and special guidelines for construction were set.
In this year’s guidance about the rate increases, FEMA stated, “It is important to note that nearly 80% of NFIP policyholders are minimally impacted by [Congressional changes to the program].” Unfortunately, in New York City, that ratio is the reverse because of how many older buildings the City has: about 80% of the properties in New York City’s high-risk flood zones were built before the first flood map was adopted and they face the biggest increases in the cost of their insurance.
Here’s a summary of the changes policyholders can expect:
Primary Homes: When you renew your policy for your primary home, your insurance rate could increase by up to 18%. However, unlike last year, homeowners in the highest risk flood zones should only see an increase in their premiums of up to 5%. If your home was substantially damaged in Hurricanes Sandy or Irene, you will see a rate increase of 25% annually until your premium reaches the full-risk rate.
Second Homes & Businesses: If you renew a policy for a second home or a business in the high risk flood zones, your rate will increase by 25% annually until your premium reaches the full-risk rate.
Annual Charge: In addition to this rate increase, you will be charged a “Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) surcharge.” For primary homes, the charge is $25. For businesses and second homes, the charge is $250.
What You Can Do:
If you see increases on your policy that are above the increases outlined here, call your broker and make them explain how they are getting to the new, higher rates.
With the HFIAA surcharge, you will automatically be charged $250 — the second-home rate — unless you prove the home is your primary home. You will receive a notice from your agent that will require you to submit proof.* If you do not provide this documentation within 30 days of the date of the notice, you will be charged $250 per year.
Learn more at the Center for NYC Neighborhoods’ flood insurance website, FloodHelpNY.org. It’s New York’s go-to source for everything you need to know about flood insurance and your flood risk. Have questions? Call our Homeowner Hotline at 646-786-0888.
*Driver license, automobile registration, proof of insurance for a vehicle, voter registration, documents showing where your children attend school, or homestead tax credit form for primary residents.
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Keeping seniors in their homes is one of the next big challenges for housing advocates.
Seniors are among the fastest growing populations in New York, and many are homeowners. But they face unique challenges: their housing stock is aging, requiring costly repairs, and they may need retrofits to allow them to “age in place,” such as no-step showers and wheelchair-accessible entrances. A further challenge for senior homeowners is that they often rely on fixed incomes to get by. In this context, affordable housing is a critical need for those who who want to retire in the communities where they’ve lived for years or decades.
The number of seniors in New York City is expected to grow from 1.2 million to 1.8 million over the next 15 years. In response, the Center, along with five community-based partner organizations, is piloting a program to coordinate services to help senior homeowners. Our goal is to raise awareness, build partnerships and minimize service gaps, while focusing on isolated seniors and linking them to resources before they face a crisis.
This is only the start of a long-term effort to address the needs of senior homeowners that must also include legal services for bankruptcy, deed theft prevention and estate planning, as well as financial counseling and repairs.
Fellow housing advocates are also working at the state level to address seniors’ needs.
Enterprise Community Partners, for instance, is calling for the State to allocate funding in this year’s budget for a new Senior Affordable Housing Program that would invest $50 million over five years on new senior housing; $4.5 million for rental assistance for low-income families in private housing; and $10 million for coordinators to help seniors age in the homes of their choice.
Judi Kende, vice president and New York market leader at Enterprise, wrote in the Albany Times-Union earlier this month that even as housing costs have increased, social security payments (often the only source of income for low-income seniors) have not kept pace.
“These statistics are more than numbers; they are our parents, our grandparents, our neighbors,” Kende wrote.
Image credit: Flickr / Chris Goldberg
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In a previous blog post, we showed how nearly a decade after the Great Recession many black homeowners in the city owe more on their mortgages than their property is worth. Homeowners in these “underwater mortgages” are unable to begin to build wealth and are more likely to end up in foreclosure.
This time, we’ve taken a look at home sale prices, again finding stark racial and ethnic disparities. In this case, prices have rebounded since the recession in majority white and Asian neighborhoods, but not so in majority Hispanic and, most markedly, black neighborhoods. While the luxury market (until recently at least) has been soaring, particularly in Manhattan, and bidding wars regularly break out in gentrifying areas of central Brooklyn and western Queens, other neighborhoods with predominantly black homeowners show values that are below 2004 levels.
The following chart captures the heart of this story: Forty-six percent of black homeowners live in ZIP codes where the median home value has decreased since 2004. Another 26 percent live in ZIP codes where home values have only marginally increased, giving owners a meager gain in equity for 10 years of ownership.
So what does this mean for housing policy in the city? Homeownership remains one of the best avenues for wealth creation; however, there is a tension between affordability and equity accumulation. When property values in a neighborhood rise too quickly, it can lead to speculation and displacement of longtime residents. But when property values crash and then rebound slowly, as in neighborhoods like Wakefield in the Bronx and Jamaica, Queens, many homeowners struggle to pay their mortgages and are unlikely to have the option to move, even if they wanted to.
These patterns in predominantly black homeowner neighborhoods, and to a lesser degree in Hispanic majority neighborhoods, did not develop in a vacuum. Starting in the 1930s, extensive redlining by the federal government effectively stopped lenders from issuing mortgages in predominantly non-white neighborhoods. Redlining was followed by racial steering and blockbusting that largely determined where non-whites were able to purchase homes. Later, with the arrival of blacks and Latinos, those areas –including southeast and central Queens, central and eastern Brooklyn, and much of the Bronx — were part of the national “white flight” phenomenon, with corresponding municipal disinvestment as neighborhoods shifted.
Today, homeowners in these same neighborhoods are struggling to get reasonable loan modifications and stave off foreclosure. Through its network of over 30 community-based partners, the Center has helped coordinate free, high-quality housing counseling and legal services for hundreds of those residents through the New York State Attorney General’s Homeowner Protection Program.
So what can policymakers do to support stable and affordable homeownership for these households in the years to come?
For one, it’s time for widespread principal reduction modifications by Fannie Mae and Freddie Mac. The majority of housing economists believe that principal reduction is the most effective solution for resolving mortgage distress for underwater homeowners. While the Federal Housing Finance Agency, which oversees those quasi-governmental institutions, has announced plans to implement a principal reduction pilot that will serve a very small portion of underwater homeowners, details on the program are not yet public and it’s unclear how New York City homeowners may benefit.
In the meantime, the Center, through its affiliation with the Coalition for Affordable Homes, has been advocating for city and state funding to purchase distressed mortgages at a discount and to pass on the write-downs in the form of principal reduction. Unfortunately, the Federal government has, for the most part, focused on selling distressed mortgages to deep-pocketed investors seeking to maximize profit.
Image credit: Flickr / Marques Stewart
Chart Sources: DOF Rolling Sales, Census ACS 5-year estimates 2010-2014. ZIP codes for which there were insufficient 1-4 unit home sales data were excluded from this analysis. Those ZIP codes are primarily in Manhattan below 120th street and above 153rd street. Outer borough ZIP codes excluded for the same reason are 11697, 10451, and 11359.
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The City has published its 60-day lien sale list for 2016, and the good news is that the numbers keep falling. This was an expected outcome, given that many homeowners will likely enter into a payment plan or have their properties taken off the list by the City before this year’s sale on May 12. However, there are thousands of properties still facing liens.
Related: How to protect your home from the tax lien sale | Spring is tax lien season in NYC, when unpaid debts blossom into burden for homeowners
Over 3,000 buildings were removed between the publication of the 90- and 60-day lists; over 1,600 were one-to-four family homes, the ones that the Center works to protect. The largest declines were in the 8th Council District, represented by Speaker Melissa Mark-Viverito; the 48th district represented by Chaim M. Deutsch; and the 33rd district represented by Stephen Levin.
Check out the updated tracker below to see how the numbers have changed.