Reply With QuoteI was told by Jim O, who was told by his wife, who heard from her friend, who thought she heard in on the tv of a reporter on the radio saying that Buffalo led the nation. This post MUST be wrong because you say Buffalo is number 2.
COPY: http://www.buffalonews.com/145/story/109122.html
Buffalo’s supply of low-priced, vacant homes attracts “flipping” schemes by out-of-town investors “looking for a quick profit.” - Jane Azia, New York State Banking Department
Buffalo has high rate of default and foreclosure on mortgages
By Jonathan D. Epstein, Updated: 06/29/07 8:33 AM
Buffalo has one of the state’s worst rates of default and foreclosure on mortgage loans, and actions are needed not only to stem the tide but to correct the conditions that caused it, participants in an anti-predatory lending forum said Thursday.
Five panels of consumer advocates, government officials and industry representatives spent more than seven hours at the Frank E. Merriweather Jr. Library on Jefferson Avenue, reviewing abuses and problems in the mortgage industry.
They also discussed what steps have already been taken and batted around new ideas, such as cooperative foreclosure prevention projects. And they responded to questions, as the state’s interagency HALT Task Force sought ideas to fight abuses and protect consumers.
“We want to partner with you in ending these and other abusive practices,” said Jane Azia, director of nondepository institutions and consumer protection for the New York State Banking Department. “The solutions we develop together can have a broad impact.”
Discussion centered on the subprime industry — loans to borrowers with bad credit — and on the rising losses and foreclosures that plague the nation and especially Buffalo. Nationwide, experts have predicted at least one in five subprime mortgages made in the last two years will go into foreclosure.
Locally, Azia noted, at the end of last year, nearly 14 percent of “subprime” loans to borrowers with bad credit were in default — among the highest levels in the state. In all, she said, nearly 3,000 households in Western New York had entered foreclosure during the year.
More broadly, Western New York had the second-highest foreclosure rate for all loans among the state’s largest metropolitan areas in the third quarter of last year, according to the Empire Justice Center in Rochester. And it was more than double the previous quarter.
Finally, aside from the Gulf Coast areas devastated by hurricanes, the Buffalo-Niagara Falls area in 2006 had the highest number of defaults on prime-quality loans in the first three months after the loans closed.
“This is of great concern to us, that loans that we expect to perform are not,” said Holly Lindstrom, data analyst for the Western New York Law Center.
Azia and others said the desire of sophisticated investors for higher yields encouraged lenders to make “dubious” nontraditional loans “often with insufficient regard for the borrowers’ ability to repay the loan.” And the existence of the “secondary market” to buy the loans meant lenders just passed on the risk.
If that’s not bad enough, Azia noted, the population flight locally only adds to Buffalo’s excess and vacant housing, whose extremely low prices makes them subject to “flipping” schemes by out-of-town investors “looking for a quick profit.”
39,000 vacant homes
More than 20,000 homes in Buffalo and 39,000 homes in surrounding areas are vacant, giving Buffalo a 17 percent vacancy rate — 10 times the average rate for the Northeast.
Mortgage fraud has also increased sharply, and troubled borrowers are being victimized by scams that offer to save their homes but really steal the deed.
For their part, officials from state and federal agencies cited the steps they are taking, including prosecutions, other enforcement actions and fines, fair lending and civil rights investigations, new lending guidance and regulations, new laws to license individual mortgage loan officers and protect consumers from “foreclosure rescue” scams, and participation in a national broker registration.
But former Rep. John La- Falce, who moderated the industry panel and peppered speakers with pointed questions throughout the day, said that’s not enough. He questioned the banking department’s consumer protection efforts, and asked why the New York-based agency has no office in Buffalo.
“We need it. There’s too much going on here in Buffalo not to have an office here,” he said.
He called for mass class-action suits or even a lawsuit under the federal racketeering law against lenders, loan servicers, investment banks and the investors who buy the mortgages. He said that’s the only way to force them to modify the loans so consumers don’t lose homes.
“I don’t have any desire to send anybody to jail,” he said. “I have a desire to use a big stick.”
Mortgage lenders and brokers defended their efforts to expand homeownership, but acknowledged the problems. They say they’re already taking steps but disagreed over how far to go.
“The market has already begun to correct by eliminating programs, changing guidelines and tightening underwriting,” said Greg Krauza, president of the New York Association of Mortgage Brokers. “We certainly do not need to regress with unreasonable restrictions or government regulation that would do more harm to the market.”
The meeting by the interagency HALT Task Force was the second such summit in the state since Gov. Eliot Spitzer appointed the group in May. The event was co-hosted by the Western New York Law Center and the city’s Anti-Flipping Task Force.
The state task force is chaired by New York Superintendent of Banking Richard H. Neiman, and includes representatives from seven agencies. Azia filled in for Neiman Thursday after he was unable to get a flight from New York City to Buffalo because of bad weather.
Falsified documents
Consumer advocates relayed tales of clients being duped into inappropriate loans, especially adjustable-rate mortgages with low “teaser” rates that would jump after the first few years. Those loans were underwritten on the low initial rate, not the higher permanent cost.
Documents and income also were sometimes falsified. And many loans were written for more than the home was worth.
“So not only do you get the terrible mortgage, but you get trapped,” said Legal Aid Bureau attorney Athena McCrory.
The advocates also complained of uncooperative lenders, who tout “loss mitigation” programs but make it difficult to qualify.
“Servicers have no incentive to work with the borrower,” said Carol Brent, attorney at Legal Services for the Elderly, Disabled and Disadvantaged of Western New York.
jepstein@buffnews.com
I was told by Jim O, who was told by his wife, who heard from her friend, who thought she heard in on the tv of a reporter on the radio saying that Buffalo led the nation. This post MUST be wrong because you say Buffalo is number 2.
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AND...Where was Tom, Dick and HarryOriginally Posted by leftWNYbecauseofBS
Joe Illuzzi of Illuzziletter.com, who has been embroiled in controversy recently for his battles with EC Executive candidate Keane as well as for his too-close ties to Independence Party Chair Orsini, just published this helpful informative housing article.
R. Kern
COPY: http://illuzziletter.com/
August 21, 2007
City Court Judge Henry Nowak
As Bank Foreclosures Rise In Buffalo, Judge Nowak Says, "Hold On," While Wall Street Sneezes
by Staff
PoliticsNYNET@aol.com
A reporter pays a visit to Buffalo City Court Judge Henry Nowak's Housing Court and is surprised by what he finds. Instead of a long line of home owners whose houses need work to pass inspection, what he finds is a long list of home owners being foreclosed on by out of town financial institutions such as Wells Fargo and Deutsche Bank.
What's going on here?
In fact, its the local version of a syndrome which has seen foreclosures increase in many parts of the nation. Even more interesting, it's appears to be a symptom of a disease which is a big part of the reason for the head cold currently afflicting Wall Street.
According to Executive Director Aaron Bartley of PUSH Buffalo, it's all part of a get rich quick scheme being resorted to by Wall Street firms which can inflate bottom lines temporarily while it devastates cities like Buffalo.
"What these firms are doing is entering into mortgage agreements with individuals in cities they never visit with provisions that include increases in monthly mortgage payments which they know these people are going to have a hard time paying," Bartley explains. "Then they foreclose on the properties when these people can't pay and then they abandon the properties, adding to the roster of totally neglected homes in a city like Buffalo."
Meanwhile, these financial firms have very often sold bonds based on the value of the inflated mortgage payments that are technically owed to them, but which they know are worthless because the mortgagees are unlikely to be able to pay.
"This is the cause of much of the instability you are seeing on Wall Street," Bartley explains. "These firms are selling bonds that are worth little or nothing, leaving investors holding the bag, which in turn, leads to inflated stock values which soon plummet."
Meanwhile, back in Buffalo, these shenanigans have led to a crisis in some inner city neighborhoods which have seen whole blocks of homes foreclosed on with no end in sight...at least until recently.
"A recent ruling by Judge Nowak has the potential to stop this nonsense in its tracks," says Bartley. "Judge Nowak ruled that a bank can not foreclose on any property in the City of Buffalo if that financial institution has outstanding judgments against it for non-payment of fines related to neglect of the properties it already controls...Clearly, this decision, if it's not reversed, will force this firms to at least maintain these properties or else not be so eager to foreclose."
Currently, Bartley and his number two, Erie Walker, are looking this issue to see what companies such as Wachovia and Fargo are doing with all these properties that are falling into their hands.
"For example, Wachovia has foreclosed on 561 properties since 2002 but has only sold 18 of them, according to the records we have seen," Bartley reports. "We are going to find out what's going on with all these properties and we'll let the community know."
COPY: http://www.buffalonews.com/260/story/152434.html
Bush to outline aid to mortgage holders
By DEB RIECHMANN - Associated Press Writer, Updated: 08/31/07 9:01 AM
Offering federal help for strapped mortgage holders, President Bush is proposing to aid hundreds of thousands of borrowers hard hit by the housing slump.
The president on Friday was to talk about several initiatives and reforms to help homeowners with risky mortgages keep their homes, a senior administration official said Thursday. Bush also was to discuss efforts to prevent these kinds of problems from arising in the future.
The official said Bush will direct Treasury Secretary Henry Paulson and Housing Secretary Alphonso Jackson to work on an initiative to help troubled mortgage holders get services and products they need to keep them from defaulting on their loans. The official spoke on condition of anonymity to discuss details of the initiatives ahead of the presidential event.
Bush also planned to:
- Urge Congress to pass Federal Housing Administration overhaul legislation that would give the FHA more flexibility in assisting mortgage holders with subprime mortgages.
- Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans.
- Call for rigorously enforcing predatory lending laws and strengthening lending practices.
Foreclosure and late payments have spiked, especially for so-called subprime borrowers with blemished credit histories or low incomes. Higher interest rates and weak home values have made it impossible for some to pay or to keep up with their monthly mortgage payments. Some overstretched homeowners can't afford to refinance or even sell their home.
Mortgage foreclosures and late payments are expected to worsen. Some 2 million adjustable rate mortgages are to reset to higher rates this year and next. Steep penalties for prepaying mortgages have added to some homeowners' headaches. . . .
This is a very misleading article because it paints the foreclosure "problem" in NYS as being on a par with the "mortgage crisis" on a national level which once again paints the area in a bad light. The Illuzzi article is also misleading.
Buffalo does NOT have a high rate of default on mortgages. In fact, nationally, it's currently #83 on the list of 100 top foreclosure rates (see link: CNN MONEY ), significantly lower than Suffolk/Nassau Counties (#57) and Rochester (#69), and one spot behind NYC (#82). I doubt that either NYS or Buffalo was much worse in June.
More importantly, most of the problems with foreclosures have been with "flippers" and with mortgage scams, not with the problems that affect mortgage foreclosures in other parts of the country.
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