Published: March 2008

Foreclosures take toll on city finances

The National League of Cities released a new "Insta-Poll" that showed two-thirds of cities and towns are seeing increased foreclosures and one-third are seeing reduced city finances as a result.

Nearly two-thirds of cities report that foreclosures have increased in their communities during the past year, with one-third seeing declines in city revenues as a result, according to a poll released this month by the National League of Cities (NLC).  The poll also found that more than half of cities saw increases in the need for temporary assistance for services such as counseling, food banks and other non-housing related issues.

“Mortgage foreclosures are causing havoc in many of our communities,” said Cynthia McCollum, president of the National League of Cities and council member from Madison, Ala.  “Cities are already seeing reductions in their revenues at the same time that more services are needed to address the many related problems caused by the foreclosures.  Unfortunately we also know that the problems will continue for many years before they get better.  That’s a tough situation for all of us.”

The results of the online/email poll represent responses from more than 200 cities.  Of particular note is the ripple effect the housing crisis seems to be having on city finances.  One out of three report that funding for programs and projects have declined in the past year.  

Also significant is the increase in abandoned and/or vacant properties and other forms of blight, reported by one-third of the cities.  “In one new community in Charlotte, NC, 115 out of 123 homes were boarded up,” said McCollum.  “Where there are widespread foreclosures, cities must ensure the safety of the residents still living in the community, must keep the grass mowed, and stop vandalism.”

The NLC poll shows that the housing crisis is disproportionately impacting certain residents, with half reporting the crisis is affecting lower-income families; one-third seeing problems for families headed by single parents; and one in five seeing impacts on seniors and people of color.

“We know that homeownership strengthens our communities – but the housing crisis is making it more difficult to achieve this goal.  Overall, financial stability of millions of Americans is in jeopardy,” McCollum said.

The poll also shows that in more than half of the cities, the lending community has not reached out to local officials to offer help or support in dealing with foreclosures and housing finance-related impacts.  The groups working most closely with cities are non-profit and civic organizations, followed by state governments and other local governments.

Download a copy of the Insta-Poll fact sheet.

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National League of Cities (NLC)


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