Property Shark, the popular real estate tracking site, just released its Monthly Foreclosure Report for August 2008. Though the report indicates that four boroughs have seen a decrease in foreclosures, though they continue to rise in Queens. In fact, this month’s figure represents an increase of 113% from August 2007, and up 43% from July 2008, setting a two-year high for Queens.

What makes Queens different from the rest of the boroughs? Is it a higher concentration of subprime loans, more people laid off, or something else?

More likely is that this is a blip on the radar, an anomaly that will be wiped out in future months as the full impact of the foreclosure crisis hits New York City full in the face. As if to prove the point, on September 4, 2008 Toll Brothers Inc said that the condo market in New York City is not as strong as it was, and the company is “scared” about the market’s future amid deterioration in the financial industry.

“It has felt some of the storm that’s come to the residential real estate market in the country,” Chief Executive Bob Toll said during the company’s third-quarter conference call.

New data released by PropertyShark.com shows that Long Island foreclosure rates are speeding along at a far higher clip than New York City.  Long Island foreclosures reached a one-year high in the second quarter of 2008, with 693 new auctions scheduled in the second quarter of 2008, 40% higher than in Q2 2007.

Suffolk County foreclosures, however, increased at a greater rate than Nassau County.  Suffolk County foreclosure rates were 102% higher than the same quarter last year, vs. Nassau County’s 14% increase over the same time period.  Overall, Long Island’s foreclosure rate per household twice as large as New York City.

The hardest hit?  Hempstead had the highest rate of foreclosures per household in Long Island with one in every 833 households was scheduled for a foreclosure auction in the second quarter of 2008, double the previous quarter.

The full Long Island Q2 08 Foreclosure Report can be downloaded here.

Faced with a 150 percent increase in foreclosures since January 2005, Chief Judge of Judith Kaye has set up a pilot program in Queens to find out if a dedicated foreclosure court is necessary to handle these types of cases.  One part of the plan, which will be voluntary, is a settlement conference to help alert the borrower to possible options.

“New Yorkers are losing their homes in record numbers,” the judge said at a Manhattan news conference announcing the program. “Some neighborhoods are being ravaged by foreclosures. Can we be part of an influence for the good?”

This is good news for consumers who are going into, or are already in, foreclosure.  The judges hearing there cases will be more attuned to the subtle nuances of foreclosure defense, including the complex securitization aspects of how mortgages are transferred, packaged and sold.  This will give homeowners a better chance at defending foreclosures and ensuring a more just result.

Blackford Avenue on Staten Island, tree-lined and filled with newly built two-story town houses worth $300,000 to $400,000, is the epicenter of the Staten Island foreclosure problem.

On two tiny blocks in the Port Richmond neighborhood, eight houses are in foreclosure and five other families have received formal notices from banks informing them they are in danger of the same.

In the first quarter of 2008, 174 foreclosures were filed on Staten Island - the highest per-capita rate of any borough, up from 34 foreclosures in the same period last year, according to data compiled by PropertyShark.com, a real-estate search Web site.

Many of these homeowners took out subprime loans almost $100,000 more than the price of their homes to cover interest payments. Worse still, many did so with hardly any down payment.

The New York Post details the story of Desiree Figueroa and her husband, whose 172 Blackford Ave. townhouse was seized by Option One Mortgage and sold last week. They purchased their home for $445,000 less than two years ago from a developer. Neither had owned property before. “I never thought they’d let me have the house because my husband and I have such bad credit,” says Desiree.

But shock of shocks, the couple was approved for a subprime loan with a down payment of only $5,000. They took out a first and a second mortgage. When home prices in the area dropped, the Figueroas quickly owed more than their house was worth. Six months after closing, they fell behind on the mortgage.

The bank took over the house, and it was resold - for $375,000.

Now the Figueroas - who rent a smaller home across the street at 153 Blackford Ave. for $1,700 a month - are filing for bankruptcy because they can’t pay back the money they owe to the mortgage company.

What the Figueroas didn’t know is that Option One, a major subprime mortgage company, didn’t even own their mortgage when it foreclosed on them. Rather, Option One was merely the servicer for a large investment pool - the pool that really owned the mortgage. Had the Figueroas taken action and defended the foreclosure, they may have been able to force Option One to re-negotiate their loan to a more affordable amount. Even had this not been the case, they could have gained significant additional time in the house without paying their mortgage.

Metro reports today that rising foreclosures in Brooklyn are putting the brakes on up-and-coming neighborhoods such as Bedford-Stuyvesant, East New York and Brownsville.  These neighborhoods are among the top 10 Brooklyn areas with foreclosures, according to a 2006 list from NYU’s Furman Center for Real Estate and Urban Policy.

The Center found foreclosure proceedings had started for 885 Bed-Stuy homes last year, up from 422 in 2004. A new report put out by Corcoran shows average home prices in the area are dropping rapidly, declining 10 percent over the last three months alone.

It’s useful to remember, however, that these are the neighborhoods through which most people were afraid to drive in the 1970’s and 1980’s.  These areas were crime-ridden, boarded-up havens for crime and drugs - the places hit hardest by the crack epidemic.  So though the real estate values have declined, it’s still better to have a stable homeowner base in place to care for the neighborhood.

One boarded-up house turns into five turns into a whole block of dead homes.  Lenders and lawmakers need to realize that urban blight is not too far away, and that people should be given the chance to save their homes.

New York State Sen. Shirley Huntley on February 27 disclosed that she had deliberately defaulted on her mortgage to get a firsthand feel for her constituents’ struggles. But by March 10 - a day before stiff penalties were to kick in - she bailed out, according to the New York Daily News.

Huntley had fallen behind on her mortgage to Wells Fargo but backed out when she realized just how bad the problem is. In fact, four months worth of arrears cost her a cool $2,000 in fees to the mortgage company.

The Daily News article reveals that Huntley is no stranger to subprime mortgages, having done business with some of the worst mortgage companies out there.

But the real issue is one of the fees that accumulated in a mere four months. $2,000 is pretty high for a few letters from the servicer. And given the fact that New York foreclosures don’t usually begin until a borrower is three months behind, it can’t reasonably be said that the fees included a ton of court costs.

It would have interesting to see where the money went. But alas, our State Senator backed out before she got a real feel for the pain felt by New Yorkers who are faced with foreclosure.