Foreclosure Causing Government To Lose Taxes

Posted in Foreclosure, April 18th, 2008 |

The gloomy apprehension is that soon one in 32 house owners in New York will be cursed with foreclosures within two years or so. The story of this debacle started with the taking of sub-prime loans. These large numbers of foreclosures will cause a loss of about $65 billion to the state and local administration. This is according to a report of The Pew Charitable Trusts.

Across the county the tax loss will amount to $365 billion. This calculates to New York bearing 18% of the net tax loss. Of all those who own houses in New York nearly 52% will lose $18,334 on the value of their properties. Nationally the figure is 43.5% of house owners having to bear with a median loss of $8,771.

The manager of Pew’s, Kil Huh has written a boom ‘Defaulting on the Dream’. He analyses that the focus is on New York because real estate values are astronomical with a high concentration of buildings. Thus more houses are affected when one in the locality suffers foreclosure.

According to the survey conducted by Pew’s, across US one out of every 33 house owners will be gobbled up by foreclosure in the forthcoming two years. Marks were allotted in which New York state did not fare too badly as regards severity of the challenge and its response to it. Its plus points are that New York has refinancing and scam protection programmes as well as arrangements for counseling and legal penalty clauses against predatory lending. But so far it has not come to an understanding with lenders regarding modification of loans so as to cover a large section. Also it has not been explicit about mortgage brokers following some rules regarding its attitude towards the borrowers – more transparency, more granting of time and arranging for counseling. Nine other states have initiated such steps.

However it cannot be denied that New York state has been very proactive in measures taken to tackle the foreclosure menace. But lots more has yet to be done to reach the affected house owners in New York city and the entire metropolitan area. These and other factors puts New York high amongst those states that have taken positive effective measures against foreclosures.

It has been so far difficult to get a clear accurate picture of the foreclosure crisis because of conflicting data. The area to be covered is vast – ranging from house prices to first hiccups in payment defaults.