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

Table 17
Median Loan Amounts
Community
Percentage of
Judgment to Loan
Amount
East Delavan 107
East Side 110
Ellicott-Masten 110
North Buffalo-Elmwood 103
North East 109
Riverside 107
South Buffalo-River 104
West Side 105
Buffalo total 107
Sources: Erie County Civil Court records;
author's calculations.
Perhaps the best indicator of the forces that triggered Buffalo foreclosures in 2000
is the ratio of judgment amounts to current assessed values. While homeowners may have
become delinquent on their mortgage payments for any number of reasons, many faced a
similar predicament once they were into the foreclosure process: their homes tended to be
worth significantly less than the remaining balance on their mortgage loans. For Buffalo
overall, the judgment amount was 119 percent of current assessed value, suggesting that
the typical Buffalo homeowner owed about 20 percent more on his or her mortgage loan
than the current value of the home. Thus, a large proportion of distressed homeowners
would have been unable to prevent foreclosure through the sale of their property. At the
same time, homeowners faced with such circumstances might have had little incentive to
work out an alternative to foreclosure even if they could.
Buffalo’s high ratio of judgment amounts to current assessed values--hereinafter
referred to as the judgment-to-value ratio--could be the result of several factors. Without
question, a leading contributor is the decline in home prices in the city. As mentioned
earlier, Buffalo’s median home price dropped 13 percent from 1998 to 2002. Thus, it is
likely that a significant number of city homeowners watched the value of their home sink
below their loan principal in a short time. But other factors could also be responsible for
the excessive judgment-to-value ratio. Some homes, for example, might have received
erroneous assessments at the time of purchase. Such assessments have resulted in
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