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Paul Kiesel
Paul Kiesel
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Congress Still Trying to Address Foreclosure Problem

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For every foreclosure within a one-eighth of a mile radius of a single-family home, that home losses approximately 1% of its value, according to Dan Immergluck, a professor of city and regional planning at Georgia Tech. On top of that dissatisfying statistic, a Temple University studyfound that homes located within 150 feet of vacant properties in Philadelphia lose an average of $7,627 in value.

Now the sweep of foreclosuresis affecting city budgets, as maintenance costs for these vacant and sometimes rundown homes are being footed by local municipalities. However, Congress wants to make sure that lenders, rather than taxpayers, bear the burden of having to pay these rising maintenance costs (boarding of windows, lawn care, property taxes, etc.). And many proposals have lenders potentiallybeing taxed at a greater rate than current property taxes, in order to cover these expenses. The incentive is for the lender to move the foreclosed property faster and to not be holding on to so much inventorywhich is nowbecoming a greater burden for the city and for neighboring houses.

A billbefore the House, sponsored byRep. MaxineWaters, D-Calif., would allocate $15 billion to be used forneighborhood renewal. The housing bill by Sen. Chris Dodd, D-Conn., similarly allocates $4 billion.

Of course the lenders are opposed to any legislation that would make them financially responsible for a problem that they helped originate. But if lenders aren’t held more accountable when it comes to inadvertent costs due to rising foreclosure rates, then, regardless if a housing bill is introduced or not that is favored by the White House or the general public, local governments and taxpayers could end up footing a larger bill thanoriginallyanticipated.