The foreclosure crisis for homeowners that precipitated the 2008 recession continues to be a daily source of stress, confusion, and financial hardship for hundreds of thousands of New Yorkers with Bronx homeowners experiencing more hardships than their counterparts in Brooklyn, Queens and Staten Island. According to the Center for NYC Neighborhoods, the foreclosure crisis has resulted in tens of thousands of foreclosures in New York City and even more homeowners struggling to make monthly mortgage payments.
The Bronx and especially the West Bronx communities where UNHP works, is primarily a community of multifamily rental buildings. Even so, there are 67,005 one to four family homes in the Bronx, and close to 6,000 homes in the northwest Bronx community districts of 5, 6 and 7. UNHP has been working with local homeowners since 2008 and has partnered with West Bronx Housing, The Parodneck Foundation and currently Legal Aid NYC to assist homeowners address city liens and foreclosure risks. This UNHP research, funded by Citi Community Development, seeks to develop a detailed picture of the issues faced by homeowners in New York City, specifically those living in the Bronx, to inform our outreach and foreclosure prevention work.
Throughout this UNHP research, 1-4 family homes are based on building class, and include residential buildings with 1-4 units, condominiums, or cooperatives. All the buildings included within the data in this writing are in this category, and are analyzed based on a unique borough, block, and lot identifier. There are 67,005 1-4 family homes in the Bronx, less than every borough except for Manhattan which has 11,780 1-4 family homes total. The other three boroughs have many more home-ownership opportunities; 285,194 in Queens, 223,726 in Brooklyn, and 109,215 in Staten Island.
UNHP looked at three indicators of financial distress for Bronx homeowners, lis pendens, sold NYC tax and water and other unpaid NYC debts, and sold water liens, a subset of sold liens that are for the nonpayment of water and sewer charges. Lis pendens filings are public records filed against a property with the county which help creditors collect debts. This analysis shows lis pendens that regard mortgage default, tax delinquency, or unpaid common charges, all of which indicate pre-foreclosure or the inception of the foreclosure process. Lis pendens related to mortgage default can be filed by the lender after a mortgage has gone unpaid for three consecutive months.
We have included any documents labeled as “Lis Pendens,” “Foreclose Mortgage,” “Foreclosure Of Tax Lien,” “Foreclose Tax Lien,” “Foreclose Fed Tax Lien,” “Federal Tax Lien,” or “Foreclose Condo Lien” in our lis pendens analysis. Lis pendens is a strong indicator of increased foreclosure risk and is a required legal step as a mortgage holder moves towards filing foreclosure against a homeowner.
Overall, 8.2% of NYC properties have one of these types of lis pendens filed against them. The Bronx has the highest rate (not number) of lis pendens, 10.1%, compared to 8.7% in Brooklyn, 8.2% in Queens, and 3.6% in Manhattan. The lis pendens rate map illustrates that east Brooklyn and the majority of Bronx zip codes have the highest incidence of lis pendens and risk of foreclosure. The Bronx zip codes of 10452, 10453, 10456, 10457, 10458, 10460, 10467 and 10474 all have lis pendens rates above 14% - a higher percentage than the Bronx average. The number of lis pendens issued for the Bronx has increased over the most recent year of data, June 2015 through May 2016, from 60 to 160.
Another way of identifying homeowners at risk of foreclosure is through tax lien sales. The Department of Finance sells tax liens to authorized third-party buyers for unpaid taxes, water bills, and other city charges.Liens on property taxes must be over $1,000 and three years old, while liens on water or sewage debt must be over either $1,000 or $2,000 and 1 year old, depending on building type, before they can be sold. Each year the Department of Finance of NYC publishes a list of the properties with liens that are up for sale and homeowners have an opportunity to pay them. Once a tax lien is sold to a third-party collection agency, they can add fees and charge high interest rates of up to 18 percent daily. This mounting debt can force some homeowners into foreclosure. As homeowners fall behind on property taxes and water bills, it is an indicator they may also have difficulties paying their mortgage. For these reasons, UNHP considers properties on the Sold Lien List, released by the city, in danger of foreclosure.
The interactive sold lien rate map, embedded above, shows sold liens as a percentage of all 1-4 family households by zip code. Orange and red areas indicate a higher percentage of sold liens in a given area. The majority of the map is dark green and has a sold lien rate of less than 1%. Yellow, orange, and red indicate trouble spots, where the rate of sold liens is greater than 4%. The darkest red areas indicate that almost 10% of 1-4 family households are on the sold liens list. Areas with the highest rate of sold liens are concentrated in the Bronx and North Brooklyn. Of the four zip codes with the highest sold lien rate, 3 of them are in the Bronx. Zip Code 10474 has a sold lien rate of 9.4%, 10456 has a rate of 8.94% and 10459 has a rate of 7.39%.
The 2016 report, “Compounding Debt: Race, Affordability, and NYC’s Tax Lien Sale,” by the Coalition for Affordable Homes, finds that the City is six times more likely to sell a lien on a home in a majority African American neighborhood than in a majority white neighborhood. Latino homeowners were two times more likely to have a lien sold on their home. The northwest Bronx is home to majority Latino (54%) and African American residents (22%).
In 2007,an amendment was made to The New York City Tax Lien Sale program that allowed for the city to sell water and sewer liens regardless of whether or not the property in question also had property liens. The Rate of Water Liens Only map shows the number of sold liens in a particular zip code that only have water debt against them. This can be an early indication of distress, because homeowners are still making mortgage and tax payments but falling behind on other basic expenses. Again, the areas with the highest numbers of houses with a lien against them including water debt are clustered around the same areas as those with high sold lien rates.
Sold liens in the Bronx peaked in 2014 with 899 properties on the sold liens list in that year. More alarming are the amount of properties on the sold lien list because of water debt only. In the Bronx, there have been 2,608 properties on the sold lien list from 2012-2016. 1,077, or 31.14% of the properties were on the sold lien list due to water debt, the highest of any of the other boroughs. In contrast, in Manhattan only 10.53% of the sold liens have a water debt on the list.
Looking at mortgage applications, the Bronx has the highest mortgage denial rate (denied/total applications) for all mortgage types in NYC of 0.79%, compared to 0.59% in Brooklyn, 0.57% of Queens, 0.52% of Staten Island and 0.44% in Manhattan. Low home-ownership in the Bronx, attributable to fewer opportunities for ownership in the land use of the borough( see map of Bronx homes, coops and condos) as well as the qualification levels of interested buyers may be part of the low mortgage activity. There are 67,005 1-4 family homes in the Bronx, less than every borough except for Manhattan which has 11,780 1-4 family homes total. The Bronx has received 8.3% of all approved mortgages in NYC, which is the lowest among the five boroughs, while Queens, Manhattan and Brooklyn have received 26.0%, 23.9% and 23.5%, respectively. UNHP plans to undertake more research around mortgage applications. Significant racial disparity in homeownership rates exist nationwide among prime working age adults, aged 25 to 54 years of age; In New York, 46.2% white, 15% Black, 23% Hispanic and 11% Asian households are homeowners,
The Bronx also has the highest number of FHA insured mortgages across the boroughs. FHA Insured mortgages are backed by the Federal Housing Administration, and are available to homebuyers with lower credit scores and require lower down payments than traditional lenders. 12.01% of New York City mortgages are FHA Insured. In the Bronx, FHA Insured mortgages account for 26.3% of approved mortgages. Compare that to 16.4% in Staten Island, 15.1% in Queens, 12.8% in Brooklyn, and 0.31% in Manhattan. The relatively high rate of FHA insured mortgages is an indicator that homeowners in the Bronx may not have the credit score or down payment required for conventional mortgages.
Overall, homeowners as well as interested homebuyers, in the Bronx face a number of challenges. There are limited home buying opportunities within the borough, and the Bronx has the highest mortgage denial rate across the five boroughs. Recent trends in 1`-4 family home purchases by developers looking to convert them into multifamily properties also hinder the first-time homebuyer and have repercussions for the character of the neighborhood and future home values. The Bronx has the highest rate of FHA insured mortgages and the highest rate of lis pendens among the boroughs, and many of the zip codes with the highest rates of sold liens, a disproportionate amount of which are due to water debt, are found in the Bronx.
UNHP will continue to work with partners to assist homeowners at risk of foreclosure in our community. Based on this research, UNHP plans to increase outreach to homeowners on the lien sale lists. Despite a slow down in phone calls for foreclosure prevention services at UNHP, the data provided by this research shows an ongoing need for the eviction prevention services of our partner, Legal Aid Society. UNHP will look at our methods of outreach in order to encourage Bronx homeowners to seek assistance with missed mortgage payments and delinquent city liens. UNHP will join with NYC homeowner advocacy groups to seek reform in sold liens and other policy reforms for low-income homeowners. Special thanks to Cit Community Development for supporting our research on this topic.