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Bronx Foreclosed Homes Driven by Liens, Over-Leveraging



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By : John Cutts    99 or more times read
The relatively large number of Bronx foreclosed homes has been driven, not only by unemployment, but also by over-leveraging by investors who purchased residential buildings at inflated prices and by the failure of homeowners to pay their water bills and other utilities.

The Bronx is now known for foreclosed residential buildings that are not being maintained by lenders and guarantors such as Fannie Mae. These buildings were acquired by private equity investors at overinflated prices who soon discovered they could not rent out the units at higher prices because of rental laws in the Bronx despite plans of spending large amounts of money for repairs.

Early this month, Fannie Mae was ordered by a Bronx judge to carry out necessary repairs at three of 14 foreclosed buildings that it owns. Lawyer Marc Landis, the receiver for the three buildings, two of which have been cited as among the most dilapidated residential buildings in New York City, said that the buildings have hundreds of building violations and that an estimated amount of $324,475 is needed to complete basic repairs on the three buildings.

Meanwhile, Bronx residents are concerned that more residential properties will become Bronx foreclosed homes after city officials sold another batch of water liens to private collection agencies in May this year and many of the homeowners have not been able to pay their arrears and redeem the liens.

Collection agencies acquired nearly 1,900 water liens last May, marking an increase from the nearly 600 liens sold in May 2008, based on records from the city's finance department.

Since May last year, New York City has sold off nearly 3,200 water liens covering mostly homes in working-class and low-income communities in Queens, Brooklyn and the Bronx. The liens are sold when homeowners become delinquent for more than 12 months on water bills amounting to more than $1,000.

The sale of liens to collection agencies and the risk of foreclosures have caused concern among housing advocates and some city officials. April Tyler of the Neighborhood Economic Development Advocacy Project said that the neighborhoods that suffered predatory lending and foreclosures are now hit with water and tax lien sales.

To protect homeowners from foreclosures due to liens, city legislator Al Vann introduced a proposal that would expand lien sale exemptions to more homeowners, in addition to low-income handicapped and seniors, who are currently exempted from lien sales.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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