This morning, I was invited to testify in the House Banking Committee about the affects of foreclosures on communities. We all know the anecdotal evidence of foreclosures – empty homes, reduced property values, reduced taxes for communities and schools, blight, etc – but the committee chair asked me to provide whatever data we have. The answer I came up with was a bit staggering. According to Lighthouse Community Development (who has done extensive studies), if a home is foreclosed but back on the tax rolls within 3 months, the cost to society per foreclosure is $22,330. If it is back on the tax rolls after 18 months, the cost is $258,400. This includes costs to homeowner, investor, municipality, neighbors. For municipalities alone, the costs of a 3 month tax hiatus is $430 per foreclosure. For 18 months, it is $34,200. This includes taxes, costs to maintain a foreclosed property (blight, cutting grass, etc). This does not include depressed prices in the neighborhoods, which falls under the “neioghbors” category. This results in millions or billions of losses to municipaliites. As a result of these impacts of foreclosures, the League testified in support of HBs 4453, 4454, and 4455 which create a 90-day moratorium on a forceclosure and require people to go through counseling and specific programs to keep them in their house.
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