Report: RI Tops New England In Foreclosures; Johnston Ranks Seventh

Rhode Island continues to have the highest rate of foreclosures and serious delinquencies in New England, according to a new report released today, and Johnston ranks seventh among RI cities and towns both in terms of total numbers and percentage of foreclosures.

The report, issued by HousingWorksRI, indicates that the state continues to rank highest, with more than 13,300 mortgages either in the foreclosure process or more than 90 days delinquent during the fourth quarter of 2010. That's 20 percent higher than Massachusetts, 17 percent higher than Connecticut, 34 percent more than New Hampshire, 7 percent higher than Maine and almost double Vermont's rate. HousingWorksRI, which consists of nearly 140 organizations working on quality, affordable housing, compiled its analysis using data from The Warren Group and the Mortgage Bankers Association's National Delinquency Survey.

The report indicates that Johnston ranks 7th out of the state's 39 communities for total foreclosures on mortgaged homes between January 2009 and December 2010.

Of the 189 Johnston homes foreclosed upon during that period, 140 were single-family homes, 20 were condominiums and 29 were multifamily units. The town’s 189 foreclosures represent 3.03 percent of its 6,240 mortgaged homes, ranking the city seventh overall in terms of percentage of foreclosed homes, just ahead of Warwick and Cranston, which tallied 2.83 percent and 2.13 percent, respectively.

During an interview at Town Hall on March 4, Chief of Staff Doug Jeffrey — who is also a licensed real estate agent — explained that the town has taken steps to ensure that foreclosed properties do not become a blight on the surrounding neighborhoods.

"We've made sure the banks have maintained the properties — we stay on them to keep the properties safe and secure, and that they keep the grass cut," Jeffrey said, "(but) tax collection on those properties is an issue."

Jeffrey said that he expects the foreclosure situation is "going to be a lingering problem" for the foreseeable future.

Cranston, Providence, Warwick and Pawtucket rank as the most impacted by the foreclosure crisis in terms of overall numbers, but, according to HousingWorksRI executive director Nellie Gorbea, the report indicates that the state's other communities were not sheltered from the storm.

"I think what we found is that there's no community in the state immune to the impact of foreclosures," Gorbea said. "While people think of this as an urban problem, really it's a statewide problem."

The 189 foreclosures in Johnston reflect how many homes were completely foreclosed upon in the town, categorized in the report as "actual foreclosures." The number does not paint the full picture of how many properties entered the foreclosure process, but did not end up at auction.

While the actual foreclosure rate in Rhode Island has started to drop, Gorbea said the fairly consistent number of homes entering the foreclosure process indicates that the problem still persists.

"I don't think we're out of the woods yet, really," she said.

While the 3 percent figure in Johnston may not sound like a widespread problem,  Gorbea said the impact on a community partly depends on how concentrated those foreclosures are.

“One of the problems that foreclosures bring about is their impact on surrounding properties," she said. "If you have more than just an isolated foreclosure in a neighborhood, it brings a different feel to that neighborhood. (Johnston’s 3 percent) doesn't sound like a lot, but when you drive down those streets where the foreclosures are concentrated, what does it do in terms of a neighborhood?"

The impact of foreclosures is multifold, but on the local level, Gorbea said they can really have an impact on neighboring property values and on municipal revenue. The report estimates that the average decline in value for the 331,175 homes in Rhode Island will be $13,745 through 2012, for a loss of $5.624 billion in lost home value statewide. The report states that foreclosures erode the local tax base while increasing expenditures due to the need for additional services.

Rather than trying to solve the crisis community-by-community, Gorbea said the solutions are really "statewide."

"Rather than get people worked up on finding out if there's a foreclosure on my street, what we're hoping to do is think more broadly," she stressed. "The issue is affecting the state's economy ... We looked a lot at the origins of the foreclosure crisis, and it's definitely tied to a lack of affordable housing. As a state we need to look at investing in affordable housing as part of the economic strategy in our state. ... Unfortunately some people think foreclosures on the market means that we're solving the affordable housing issue, but what we've tried to show (in the report) is that foreclosure does not mean more affordable housing."

For those looking to get involved, Gorbea encouraged residents to reach out to local community development corporations, like the East Bay Community Development Corporation or the Church Community Housing Corporation, serving Newport County. Those interested can also consider getting involved with community Affordable Housing Committees, which are required in cities and towns that haven't met the state's requirement of having at least 10 percent affordable housing, Gorbea said.

For more on the report, visit housingworksri.org.