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

short-tenure borrowers facing foreclosure in 2000. However, like East Side, South
Buffalo-River had an inordinate share of foreclosures on loans less than four years old at
the time of default. This relationship suggests that South Buffalo-River had a relatively
large share of foreclosures on high-risk refinance loans to long-tenure homeowners. In
2000, refinance loans made to long-tenure homeowners who defaulted in less than four
years accounted for about a fifth of all foreclosures in that community.
The relationship between owner tenure and foreclosures in 2000 also differs
between the two communities with high foreclosure rates. Foreclosed borrowers in the
North East community were more likely to be short-tenure owners, while those in the
East Delavan community were more likely to be owners of long tenure. Both
communities tended to have similar shares of foreclosures on young and old loans. Thus,
foreclosures in the North East community were more likely attributable to in-movers,
while those in the East Delavan community were more likely attributable to out-movers.
Overall, owner tenure shows little relationship with the rate of foreclosure. Moreover, the
divergent patterns of foreclosure and owner tenure among communities further suggest
that the dynamics of foreclosure differ widely.
II. Borrower Burden
To clarify the relationship between borrower financial condition and foreclosure, we
examined foreclosures in terms of borrower debt. In particular, we looked at additional
liens held against borrowers. We also analyzed the overall burden faced at foreclosure:
the judgment amount relative to the property’s value.
Additional Liens
Distressed homeowners often experience financial burdens in addition to delinquent
mortgages. To provide some measure of the financial situation of homeowners at the time
of default, we analyzed foreclosures in 2000 to assess the incidence and nature of
additional lien holders. Such an analysis may shed light on the factors contributing to
default. For example, medical liens suggest illness as a contributing factor, whereby a
homeowner may at once be saddled with increased expenses and diminished income. By
examining additional liens, we also gain an understanding of the capacity of homeowners
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