Foreclosures Raise Other Concerns For The Community

June 27th, 2008

The rate of foreclosures continues to rise unabated in many parts of the country. Market analysts expect this trend to continue throughout 2009 before there is a turn in fortunes. In the mean time however this increased foreclosure rate is spawning a whole gamut of other concerns.

Residents of areas which are experiencing a number of foreclosures are watching their neighbourhoods deteriorate rapidly. Boarded up homes are turning into eyesores with overgrown gardens, piling trash and algae ridden pools. These properties are also becoming safety hazards as mosquitoes are spawning on the stagnant water of the pools and thus increasing the risk of disease. Many of the abandoned homes have become havens for bees who build large hives undisturbed within the premises.

Foreclosed homes tend to act as magnets for anti social activities and it is little wonder that neighbourhood crime is on the increase. The risk of break-ins and burglaries are ever present and has prompted the police departments of several counties to issue warnings and guidelines on home security. Burglaries can range from merely stealing copper pipes and other fittings on the outside of the house to looting furniture and other possessions from inside it. In extreme cases, fraudsters have been known to break in, change the locks and actually put the home up for sale pretending to be the owners!

Mortgage fraud is another concern that has raised its head with the spurt in foreclosures. Typically in such frauds a home is bought and appraised at an inflated value. A supposed buyer then purchases the home at the inflated price and cheats the bank into paying the first buyer a higher price than the actual worth of the property.

Federal investigators warn that high foreclosure rates and mortgage fraud tend to go hand in hand. According to one report, the FBI at present has 1380 mortgage cases on its roles. A comparison with the fiscal year 2006 shows the extent of the increase. In 2006 The FBI was investigating 818 cases of mortgage fraud.

A recent court case in Las Vegas illustrates the situation vividly. Eve Mazzarella, 30 and Steve Grimm,45 were prosecuted for having made a profit of $15 million from fraudulent loans totalling to $107 million. The case involved the sale of a home on Rolling Hills Drive which turned out to be one of 277 properties involved in the fraud.

In fact, with a foreclosure rate of 4.2 per cent, Las Vegas has been termed “mortgage fraud ground zero” by Scott Hunter, FBI supervisory agent.