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

The distribution of foreclosures between purchase and refinance loans varied
widely among Buffalo’s communities and emphasized the communities’ different
experiences. Purchase loans accounted for a somewhat higher proportion of foreclosures
in the East Delavan and North East communities— the two areas experiencing the
highest rate of foreclosure— than in Buffalo overall. However, the patterns in the
distribution of foreclosures by loan type demonstrated in Table 11 appear to be tied more
to the patterns of loan performance displayed in Chart 7 than to the overall foreclosure
rates of communities. In some parts of Buffalo, the ratio of purchase to refinance
foreclosures was the opposite of the ratio for Buffalo overall. In South Buffalo-River and
Ellicott-Masten—two very different communities in socioeconomic terms— refinance
loans accounted for a larger share of foreclosures than did purchase loans. This was
especially true for South Buffalo-River, where 55 percent of foreclosures were on
refinance loans. Conversely, Riverside, which is racially similar but generally has lower
income than South Buffalo-River, presented a very different pattern: almost 80 percent of
its foreclosures arose from purchase loans. Clearly, different phenomena are at work in
these two communities. One phenomenon is transition. As Table 1 and Map 5 indicate,
Riverside saw a significant amount of racial change over the 1990s; this may be another
community attracting new, low-income minority homeowners.
Overall, the distribution of foreclosures between purchase and refinance loans
found in our analysis is similar to the distribution observed in the 1998 Rochester study.
However, one area in which the findings differed significantly was the percentage of
foreclosures that were assumed mortgages. In 2000, 9 percent of Buffalo’s foreclosures
were assumed mortgages, a significantly lower share than Rochester’s 23 percent in
1998. Assumed loans were not unusual in the 1980s, but they have become rare today
due to lender restrictions. The wide difference between Buffalo and Rochester may
indicate a difference in the dynamics of foreclosure between the two cities. For example,
a greater proportion of Rochester foreclosures may have been assumed loans from the
1980s. Some difference in the share of foreclosed loans that were assumed is also
apparent among Buffalo’s communities. Assumed-loan foreclosures, for instance, were
rare in South Buffalo-River, representing just 3 percent of foreclosures, but they were
much more common in East Side, accounting for 14 percent. Because assumed mortgages
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