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Jax Daily Record Wednesday, Jul. 19, 200612:00 PM EST

Study indicates foreclosures linked to violent crime

by: Miranda G. McLeod

by Miranda G. McLeod

Staff Writer

A house is the biggest investment of most people’s lives. Past credit comes into play, life savings are at stake and there is a risk of losing your house if proper payments aren’t made.

“There’s value in preparing for home ownership,” said Dawn Lockhart, chief financial officer of Family Counseling Services. “This is the biggest financial decision you will make.”

But in Jacksonville, many people aren’t prepared for home ownership. According to RealtyTrac, a California-based company that tracks foreclosures nationwide, there is one foreclosure for every 133 households in Jacksonville. That’s enough to rank the city seventh in the nation and, according to James J. Saccacio — chief executive officer of RealtyTrac — Jacksonville is in the top 10 despite below-average unemployment and above-average home price appreciation.

Even though the crime rate in Jacksonville has dropped significantly the past 13 years — from 11,880 violent crimes with a population of 681,631 in 1991 to 6,810 violent crimes with a population of 840,474 in 2004 — a recently released study shows there is a direct correlation between foreclosure rates and crime rates.

For every 1 percent of foreclosure there is a 2.33 percent increase in the rate of violent crime, according to a study released by Dan Immergluck of Georgia Tech and Geoff Smith of the Woodstock Institute. They only found one other study that investigates the correlation between foreclosures and crime and it was conducted in Chicago. The study indicated a couple of things:

• Foreclosures, particularly in lower-income neighborhoods, can lead to vacant, boarded-up or abandoned properties, which in turn, contribute to “physical disorder in a community that can create a haven for criminal activity, discourage social capital formation and lead to further disinvestment.”

• Using conservative estimates, Immergluck and Smith also concluded that each conventional foreclosure within an eighth of a mile of a single-family home results in a 0.9 percent decline in property value.

This means that, for the entire city of Chicago, the 3,750 foreclosures in 1997 and 1998 are estimated to reduce nearby property values by more than $598 million. That’s an average cumulative property value effect of $159,000 per foreclosure, which doesn’t include effects on the values of condominiums, multi-family rental properties and commercial buildings.

Immergluck’s and Smith’s less conservative finding corresponds to a citywide loss in property value of just over $1.39 billion, which corresponds to an average cumulative property value effect of more than $371,000 per foreclosure.

Direct costs to city government in Chicago involve more than a dozen agencies and two dozen specific municipal activities, generating governmental costs that in some cases exceed $30,000 per property, according to the study.

“The initiating issue is the inappropriate assessment of who’s ready for homeownership,” according Lockhart. “There is a large network of families whom have been promoted to having the opportunity to own a home. They have access to home loans from predatory lenders who make more money by making a bad loan than they do by making a good one.”

Lockhart added there is a large cadre of firms who provide loans to individuals with low credit scores, which only perpetuates the cycle of inability to pay, leading to foreclosure.

“Jacksonville was one of the last major metropolitan cities to take an aggressive approach to the issue,” said Lockhart.

Family Counseling Services celebrates its 50th year of operation. It’s a non-profit organization and a United Way member agency, a member of the Alliance for Children and Families, the National Foundation for Credit Counseling and is accredited by the Council on Accreditation for Children and Family Services. Among other services, the organization teaches individuals to take information and determine what kind of home loan is appropriate for their particular needs.

“If they’re armed with the information of what they can or cannot afford, they’re more likely to make the better deal,” said Martha Cox, vice president of resource development for Family Counseling Services, which has helped more than 303 families in the last three months become more financially independent.

“The demand for a quick fix solution will always be there,” said Lockhart. “Our only armor is ourselves. It’s a prevention-oriented process. Financial literacy is one area the family doesn’t talk about and it can lead to violence in the home and or divorce.”

Financial mismanagement is not indicative of income, said Lockhart. It’s behavioral.

“The pressure is the same. It’s just like substance abuse,” she said.

While violence may be prevalent in certain demographics, foreclosure is not, according to Lockhart.

“Low income families are the best at managing cash,” she said. “And those with increased incomes have more options, which can generate just as many problems as those with lower incomes.”

“The issues can be just as intense,” said Cox. “If you’re not aware of what’s happening with your money, you can get into a lot of problems.”

Both Lockhart and Cox said change happens one family at a time and financial literacy is imperative to families’ successful economic futures.

“Home ownership is the largest form of savings for retirement. Families must be proactive to find information,” said Lockhart. “Families not taking the initiative to pursue information are abdicating their decision to others who don’t have their best interests in mind.”

Lockhart added that financial stability is about prevention.

“We can see how the community is paying for (foreclosure) and the effect on crime rates,” she said. “It’s a house of cards and rarely is it purchased with cash.”

While there are only three studies linking foreclosure and crime nationally, there is one group working to find how foreclosures affect the city. Jacksonville Area Legal Aid is in the process of mapping zip codes of foreclosures and locations of murders.

“We’re having some difficulty getting the maps together,” said April Charney of JALA, adding that it’s hard to get foreclosure data with zip codes.

“We are still just overwhelmed with foreclosures,” she said. “We have at least 10 foreclosures that actually come through a week. We try and get them before judgment because we’d much rather see people before they get behind. But usually we don’t see them until they are in foreclosure.”

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