Residential Foreclosures in the City of Buffalo, 1990-2000 - Federal ...

Chapter 1: Introduction
In 2000, there were nearly 800 residential foreclosures in the city of Buffalo, representing
a nearly fourfold increase from a decade earlier. Escalation in foreclosed mortgage loans,
however, was not solely a Buffalo problem: a study of Rochester observed a remarkably
similar trend, finding a tripling of foreclosures to more than 1,000 from 1990 to 1999. 1 In
addition, the United States has experienced a rising trend in the foreclosure rate since
1980, despite the unprecedented economic growth of the past two decades (Chart 1). This
somewhat surprising national phenomenon has only added to the uncertainty over why
foreclosure rates have been on the rise.
Chart 1
U.S. Foreclosure Rate: 1979-2002
Percent
0.4
0.3
0.2
0.1
0
1979
85
90
Source: Mortgage Bankers Association.
Note: The foreclosure rate is the percentage of loans for which the foreclosure process has been started.
95
Notwithstanding this uncertainty, the forces contributing to the national rise in
foreclosures may be having a disparate impact on central cities, particularly those in
slow-growth areas such as upstate New York. Although foreclosure actions were up
throughout the Buffalo-Niagara metro area, they were about twice as likely to occur in
the city than in the suburbs. 2 However, this finding should come as no surprise. In cities
like Buffalo, homeownership typically entails a match between a region’s lowest income
borrowers and its most precarious real estate markets. Such circumstances raise concerns
1 See Housing Council, 2000. This study tracks foreclosures in Rochester from 1990 to 1999 and provides a
good basis for comparison with our findings. In some instances, we replicated analyses in the Rochester
study to facilitate comparison.
9
00
02
0.4
0.3
0.2
0.1
0