Three-Year Foreclosed Property Study in Buffalo- By: John Cutts
A disproportional number of foreclosed property units in the Buffalo area came from subprime mortgage loans, according to a three-year study conducted by the Western New York Law Center.
The foreclosed property study analyzed more than 5,000 mortgages of homes that were added to foreclosure inventories from 2007 to 2008.
The researchers found out those most foreclosed property units are located in the East Side of Buffalo and its surrounding areas and that most foreclosures were caused by subprime lending and predatory lending.
Lead researcher Kathleen Lynch said that the major objective of the foreclosed property study is to determine the real number and factors of foreclosures in the area and to inform local officials about the findings. The results of the study would help officials craft measures to prevent future mortgage and housing problems.
According to the study, 1 in 3 subprime borrowers in high-cost communities lost their homes to foreclosure from 2007 to 2008 and many foreclosed property units came from mortgages provided in the past three years.
Lynch contended that mortgage lenders and other financial institutions took advantage of the weaknesses of subprime borrowers and imposed predatory interest rates that reached 20 percent. She explained that home loans with predatory rates are destined for foreclosure because most borrowers would not be able to sustain payments for high-rate loans even during good times.
In Erie County, out of the more than 2,700 lis pendens filed in 2007, nearly 36 percent went on to foreclosure. Most homeowners during that time were not able to save their properties from foreclosure because of lack of foreclosure prevention assistance.
However, despite the impact of subprime lending, the pace of foreclosure in the Buffalo-Niagara area is not as fast as in other New York regions. In April, the region has a 0.87 foreclosure rate, much lower than the 1.69 statewide foreclosure rate.
The areas with high foreclosure rates compared to other Buffalo-Niagara areas are Niagara Falls, Buffalo and Jamestown, whose foreclosure rates in April surpassed 2.9 percent. Areas in Wheatfield and LaSalle had moderate foreclosure rates ranging from 0.8 percent to 1.3 percent.
Statewide, New York is 37th in a ranking of states based on foreclosure rates in May. One housing unit out of every 1,646 units was hit with a foreclosure action. Nearly 4,900 residential properties received foreclosure filings, with 538 units already added by lenders to their foreclosed property inventories.
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