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Foreclosure crisis bulldozing through LI's neighborhoods

BY RANDI F. MARSHALL

7:26 PM EST, December 21, 2008

It's a street like any other in Central Islip, or, for that matter, like in any community on Long Island. Ranch homes, with a few colonials sprinkled in, dot the tree-lined block. There's a recently-paved driveway, a decorative front door, and even some newly-appointed brick. Some homes have shingles, others have siding.

Indeed, a first look down Willow Street in Central Islip, where Christmas lights adorn many roofs and windows, captures a suburban block in a typical neighborhood. But a closer look tells another story.

First, there are the boards covering the windows of the small ranch with gray shingles at the beginning of the street. Across from that house, there's the green house with boarded windows that looks like no one has lived in it for years. A large tree has fallen on another property; the windows on another home are broken.

Figures on the rise

Willow Street is one example of the effect that foreclosures now have on Long Island, as a mortgage crisis grips the country. Similar scenes appear in neighborhoods across Long Island. The hardest-hit neighborhoods have a variety of housing stocks, home prices and diverse demographics. In 2006, just one Long Island community had more than 200 lis pendens - the first step in the foreclosure process - during the period Newsday analyzed. This year, that number climbed to 12. Foreclosures have spread across Long Island, touching nearly every community.

On a three-block stretch of Willow Street, at least five houses have fallen to foreclosure. Homeowners have left or been evicted, banks have taken ownership and, in some cases, put houses up for resale at sharply reduced prices. At least nine additional properties on the street are in earlier stages of foreclosure. Another three homes are for sale.

"Every one of these streets would probably tell you the same story," said Joe Maas, the property management supervisor for Island Advantage Realty, which specializes in bank-owned real estate sales, after he walked down Willow recently. "That's the sad part."

The number of lis pendens filed on Long Island more than doubled between 2006 and 2008, according to a Newsday analysis of a foreclosure database provided by The Real Estate Report, which compiles foreclosure and home sales data, in West Islip.

In the first eight months of 2008, banks and other mortgage servicers filed nearly 11,600 lis pendens against Long Island homeowners. The residential and commercial mortgages involved, which are in default by 90 days or more, totaled nearly $4 billion, Newsday found. This is on top of the $6 billion drop in home sales dollar volume that Newsday reported earlier this fall. While the numbers are not directly comparable, together they represent one indicator of the breadth of the housing collapse's impact here.

More than half the communities on Long Island saw their number of lis pendens more than double between the first eight months of 2006 and the first eight months of 2008. Copiague, for instance, had 34 initial foreclosure filings in the first eight months of 2006. In the same period this year, that number climbed to 138. Brentwood, which had the highest number of lis pendens, had 160 filings in the first eight months of 2006 - and 645 this year. And Westbury's filings tripled from 77 in the first eight months of 2006 to 231 in 2008.

Not immune anymore

In addition, experts said foreclosures have spread from subprime loans to prime or fixed-rate loans and to homeowners with higher-incomes in high-priced homes.

"The areas that were usually immune aren't immune anymore," said Pat Ammirati, president of The Real Estate Report. "You're seeing it in all areas."

And, experts say, there's more to come, with additional waves of foreclosures expected throughout 2009. That's especially true as adjustable mortgages made in 2006 and the first half of 2007 will adjust over the next year.

No one would necessarily see the dramatic increase just by looking. Kathy and Philip Doras have strung Christmas lights from their Farmingdale cape and have decorated their lawn. It looks festive and bright - but the couple has been in foreclosure since June.

A year ago, they earned a combined $130,000 and had little problem making ends meet. But Kathy Doras, 49, had to stop working due to scoliosis and other disabilities and Philip, 47, began earning less overtime as a utility lineman. Making matters worse, their interest rate adjusted in January, and their monthly payments rose by $1,500 a month - to $4,800.

At $484,000, their mortgage is far higher than the $390,000 that homes in the area are now fetching. And because they live on the border of Nassau and Suffolk counties, the Dorases said they pay property taxes to both - a total of about $12,000.

Now, they are planning to declare bankruptcy and likely will leave Long Island. "My husband and I have always managed to find a way to climb out of it before and now, there's no end this time," Kathy Doras said.

Woodbury bankruptcy attorney Craig Robins, who is helping the couple, said he's seeing more families with six-figure incomes in foreclosure or bankruptcy. The average mortgage amounts of houses in early stages of foreclosure, too, have climbed, from $266,793 in 2006 to $341,582 in 2008, Newsday found.

Looking for help

For each foreclosure on Long Island, there are wide ripples of exposure. Those paying mortgages on properties close to clusters of foreclosed properties watch their home values decline. Many have found that they can't refinance or sell. Those who work in the area see sales decline as consumer spending falls. At Four Corners Deli, less than a mile from Central Islip's Willow Street, manager Baji Surpaneni said business is down nearly 40 percent.

More financially troubled homeowners are seeking help. Counselors with Community Development Corporation of Long Island, which advises homeowners, held 50 one-on-one foreclosure appointments in 2007 and 367 appointments so far this year, said counselor Joanie LaFemina.

Working out solutions

And banks are more willing to work out a solution, such as loan modifications, said Kisha Wright, who heads foreclosure prevention at the Hauppauge-based Long Island Housing Partnership, a not-for-profit that advocates for affordable housing.

That, of course, doesn't help everyone.

"Unfortunately, there are a lot of people who come in and lost their jobs and they haven't been able to secure new jobs and they really can't catch up," said Partnership counselor Carol Yopp. "No matter what you do, they just don't have the capability of staying in the home. And that's the harder news to deliver."

For some, the story ends happily. Bellport resident Paula White, a former New York City police officer and single mom to two college students, bought her home in 2002 but began having trouble when a refinance added to her monthly payment. In May, White missed her first payment and soon ended up in foreclosure. A Long Island Housing Partnership counselor got her a modification this fall - a 40-year, fixed rate loan with an interest rate of 5.25 percent. Now, she's looking for work, but is paying her mortgage once again.

"I won't have to worry about finding a place to sleep," White said. "Once you take care of that, everything else falls into place."

But even after escaping foreclosure, homeowners spend less and worry more, especially with an economy in crisis mode. After nearly a year in foreclosure, Nanette Costello, 43, saved her Hicksville home by getting a new fixed-rate loan, at $2,800 a month, to replace one that was already $3,100 and about to adjust.

On a $42,000 salary plus child support and a pension payment from her ex-husband, that's still a tight fit, said Costello, a hospital admissions coordinator. "I live moment to moment and paycheck to paycheck," she said.