A Queens homeowner facing foreclosure. (NY Times)

New York City has, in many ways, been spared the worst ravages of the foreclosure crisis. A city of renters, where single family homes are the exception rather than the norm and co-op and condo boards regularly turn their noses up at perfectly decent financial packages, we have avoided the magnitude of problems suffered by many other American cities.

But foreclosures have still troubled the city—and often indirectly. For example, many renters in overleveraged multi-family properties suffered when landlords fell behind on payments and ceased to conduct maintenance. And where foreclosures have hit New York, they have also been tied to increases in crime, according to a new report by NYU's Furman Center for Real Estate & Urban Policy.

That the two should be tied together is not so surprising. Across the country, a combination of falling fortunes and vacant homes, desperation and a place to conduct desperate acts, have produced similar patterns. Marijuana growers and meth labs have both taken advantage of empty abodes and absent neighbors.

But the correlation between foreclosures and crime in New York, even given the city's active street life, its declining crime rates and its far-from-abandoned neighborhoods, is noteworthy. For each property receiving a foreclosure notice, the immediate neighborhood saw a 0.7 percent increase in total crime, a 1.5 percent increase in violent crime and a 0.8 percent increase in public order crime, according to the report. However, significant increases in crime only occurred on blocks where there had been three or more foreclosures. Neighborhoods with the highest concentrations of foreclosures and existing crime rates saw the biggest upticks.

While the study took pains to look at foreclosures block-by-block to diminish the classic problem of causation versus correlation, it still suffers from that ambiguilty. The question of whether foreclosures caused crime, or whether they simply happened more often in neighborhoods long beset by poverty, where underground and illegal economies were already thriving, is difficult to answer. That empty, unattended properties invite illicit behavior is well-established, but do they actually cause crime, or just harbor it?

The study did establish that crime was not simply relocating from adjacent blocks, as might be expected in high-crime neighborhoods where local law breakers would be inclined to seek out new spots suited to their nefarious purposes. However, it was impossible to tell whether or not the crime might have migrated from other, more far-flung areas.

"This research indicates that foreclosures are not just an issue affecting individual homeowners; they threaten the stability of the surrounding neighborhood as well," Furman Center Co-Director and study author Ingrid Gould Ellen said in a release about the study.

Likewise, the study's finding that properties which resolved their foreclosures before going to auction had less of a negative effect on communities than those that had failed to do so is hard to separate from other factors. Foreclosures resolved before auction would seem to be associated with homeowners who had more resources at their disposal—financial, community, legal—that would also prove helpful in combating crime.

"This suggests that finding ways to help homeowners avoid foreclosure and resolve their cases more quickly might go a long way to addressing the effects we see," Ms. Gould added.

Greater financial assistance and community intervention may well help to curb the negative impact of foreclosures and, in connection, crime rates.

A year after the banks reached a settlement over foreclosure abuses, it is easy to imagine that the foreclosure crisis is behind the country. New York in particular, with a giddy trophy market powered by the international elite, can seem above it all. But the reality is that many homeowners, and in particular those spread across the five boroughs, are still struggling with the problem, which is deeply complicated and in many cases, unresolved by the settlement. Dinette Rivera, a 38-year-old single mother in Queens, recently told The Times that she was overjoyed to receive a letter from Bank of America telling her that her second mortgage would be forgiven, only to receive another letter, a short time later, also from the Bank of America, telling her that her first mortgage was being foreclosed on and she would need to vacate.

kvelsey@observercom

Short sales could help the mortgage madness.

For many U.S. homeowners, it's been a long, slow crawl out of the depths of the housing crisis. Even with housing prices rising again and inventory falling in many U.S. cities, many homeowners are still trapped with underwater mortgages and rather bleak prospects when it comes to unloading their greatly devalued homes.

It comes as a small consolation, then, that some six years after the crisis started, the Federal Housing Finance Agency is making it easier for homeowners to conduct short sales, The Wall Street Journal reports.

Short sales—or selling a home for less than the outstanding mortgage amount—aren't a particularly cheerful prospect for either a homeowner or a loan-holder, but they're often the best solution to severing the ties between a homeowner and a property that he or she can no longer afford to, or want, to stay in.

The process for conducting a short sale involves a complicated negotiation between banks and homeowners—a process that few homeowners are able to wrangle, often because loan holders have little incentive to approve a sale that will mean a loss of income.

But starting Nov.1, homeowners who have missed mortgage payments or have other serious financial problems will need to submit fewer documents for approval. Lenders may also approve short sales without Fannie Mae and Freddie Mac's approval if the borrower is suffering financial hardship (divorce, death, job loss or long-distance job relocation).

The regulations will also limit payments made that homeowners make to loan holders to $6,000, to stop loan holders from holding up transactions by demanding more money to approve short sales.

We wonder what John Cusack thinks of all of this.

kvelsey@observer.com

John Cusack, policy expert.

Hollywood actor John Cusack has developed some strong opinions on the mortgage crisis. He's been doing some reading, even talking to a few experts, and is reasonably well-informed about a plan some California cities have to use eminent domain to seize troubled mortgages.

Those of you curious to hear what Lloyd Dobler thinks about a complex policy initiative can now satisfy that curiosity in a poorly-produced, 15-minute long video of John Cusack discussing these issues. Mr. Cusack shares his expertise during a painfully long HuffPost Live video, kicking off the first day of Huffington Post's video news initiative in true Huffington Post fashion. Appearing via Google Hangouts, Mr. Cusack has a badly organized discussion with Arianna Huffington, segment host John Zepps, a random homeowner in California and John Vlahoplus, the guy who's pitching the plan and the lone expert in the group.

But the discussion isn't the only thing that's out of focus. Mr. Cusack's overexposed face is a barely-recognizable blob of white beneath his dark floppy hair. A Hollywood star should never be asked to set-up his own shot, of course, and this proves that perhaps they might even need help setting up their own webcam. Moreover, we understand that HuffPost Live wanted to stay with the low-budget, disorganized look of the mother ship, but they might want to cut the length of their video segments to under 15 minutes if they don't want to make viewers nauseous.

The segment begins, without introduction, as a ghostly Mr. Cusack launches into the topic without preamble: "And so I thought they could give people a view from 30,000 feet. What America would look like if those numbers actualized. John, what do you see coming as far as the next wave of mortgage foreclosures that's coming and what will America look like if we do nothing?"

We cut to Mr. Vlahoplus, also appearing via webcam, who says his piece before we finally go to the studio/newsroom where Ms. Huffington and Mr. Zepps sort of explain what they're talking about, or at least explain that Matt Taibbi wrote an article about it for Rolling Stone. "Can we get a snapshot of my laptop?" Mr. Zepps asks the cameraman. The camera goes to the screen of the wrong laptop. "That's not my laptop, actually," Mr. Zepps  corrects. And so on.

The next 12 minutes are mostly Ms. Huffington and Mr. Cusack agreeing with each other about how exciting the idea is and how passionate they both are about it.

Representative quotes:

Ms. Huffington: "If you see the string of emails that John has sent me over these last few weeks, you see this passion, this sense of urgency that has been missing."

Mr. Cusack: "That's what seemed to be so exciting about it, that it's passing, um, Washington completely and going on a civic level, right to local communities and taking action. They certainly didn't create this crisis and chop up all these houses into derivatives that can never be put back together again."

Occasionally, we hear from Mr. Vlahoplus, except for when he briefly steps away from his computer, or the random homeowner, although his sound cuts out most of the time so we can't really tell what he's saying. He probably can't afford a new computer because he's pouring all his money into his underwater mortgage.

Are you wondering why people would watch a 15-minute video of a movie star and a media mogul having an ill-informed discussion about the mortgage crisis via web cam? Doesn't life present enough opportunities to watch people having meandering, opinionated conversations about topics that they read about in The New Yorker a few months ago?

Aha, but that's what people have always turn to the Huffington Post for! To see people with familiar names who don't know what they're talking about talk about things.

kvelsey@observer.com

But wait! Things must be looking up because the bank is now launching a boutique real estate arm within the $46 billion powerhouse, which it hopes will help rehabilitate its image. "JPMorgan is presenting the subsidiary as a new firm that doesn't have the baggage of poor returns and tarnished reputations that plague existing real estate firms," said an article in Pensions & Investments.

The New York-based fund will invest primarily in distressed real estate assets and will have only about seven or eight employees. Joseph Azelby, New York-based managing director, said there is about $84 billion in distressed real estate today, providing tremendous opportunities for the firm to produce high returns on its investments, which were also sort of its liabilities. Confusing or just convenient, depending on how you look at it.

laurakusisto@observer.com

There were 1,466 foreclosure filings in the city last month, according to a report that came out today from Realty Trac. The Daily News points out that this gives New York one of the lowest foreclosure rates in the country. Unless, of course, you live in Brooklyn, where foreclosure filings actually climbed 9 percent last month, making it the second-most perilous county for homeowners in the state. 

But the main reason was a self-imposed freeze by banks shamed by Foreclosuregate (you may have read about it). That means we're likely set for a spike this month, experts say, as banks make up for lost time. 

And there's the rub. In the U.S. as a whole foreclosures were down a mere 4 percent, which some say is so slight it could be a statistical error. Despite the relatively slow rate of foreclosures in the state, one in every 2,087 houses in New York, and one in every 389 houses in the U.S., received a foreclosure notice in October. More than 2 million homes are currently in foreclosure, according to Realty Trac. That's a mess that no one-month moratorium is likely to clear up. 

It should be noted, however, that default notices (the first step in the process) also fell, suggesting we could be seeing some meaningful improvement. 

A first-rate article in last week's New Yorker compares the paperwork pile-up to an earlier debacle, in which the Wall Street of the 1960s was buried under a pile of securities certificates. It took years and legislation to put an end to the madness.

Happy Holidays.

lkusisto@observer.com