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

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Chapter 7: Conclusion and Implications In this study, we have analyzed a broad range of characteristics potentially associated with foreclosures in Buffalo over the 1990-2000 period. Although these characteristics could be associated with foreclosures in a number of ways, we did not assess the nature of those relationships. But while we did not attempt to determine the causes of the rise in foreclosures, our investigation sheds light on the context in which they occurred. Overall, Buffalo has experienced a significant rise in residential foreclosures during the study period. The increase took place in an environment of slow growth but absent any significant negative economic stimulus. However, the city continued to house a disproportionate share of the metro area’s poor. At a time when foreclosures are rising nationwide, it is not surprising that the effect would be more noticeable in the region’s central city. Evidence suggests that the process itself disproportionately affects low- and moderate-income homeowners because they lack the resources both to avert default during difficult economic times and to halt the foreclosure process once it has begun. Such homeowners clearly represent a considerable portion of the Buffalo housing market. In addition, it is clear that the growth in foreclosures is widespread and that the factors behind it are complex. The incidence of foreclosure is up significantly in all Buffalo communities, and the largest increases are found in those communities with relatively few foreclosures in 1990. But while foreclosures are up across the city, they have maintained a consistent spatial pattern, tending to concentrate in a concentric ring around the city’s periphery. This spatial distribution appears to be associated with the socioeconomic and housing characteristics of Buffalo’s neighborhoods, which in turn have followed generally observed patterns of urban transformation. Neighborhoods A central finding of our study is that foreclosures were most concentrated in Buffalo’s higher income minority neighborhoods. But above all, this phenomenon appears to be tied to patterns of urban change. For decades, the minority population in Buffalo has been migrating outward from the inner city, generally moving to newer, better conditioned housing in adjacent neighborhoods. The neighborhoods at the peak of this transition— 64
those with the highest rate of minority change— had the highest rate of foreclosure. In present day Buffalo, urban change has progressed to the extent that such neighborhoods tend to be located along the city’s borders. The high rate of foreclosures in Buffalo’s outer neighborhoods is cause for concern. Today, housing suitable for lower income homeownership is limited; almost none is newly built, and much in Buffalo has aged and has been converted into rental property. Moreover, history shows that in the Buffalo-Niagara MSA, the low- and moderate-income minority populations have tended to concentrate in urban neighborhoods. As a result, Buffalo communities such as North East and East Delavan are likely to provide some of the region’s best homeownership opportunities for this group. However, the spatial concentration of foreclosures in these neighborhoods is likely to result in socioeconomic decline. Transformation on the regional scale is further exacerbating the circumstances of Buffalo’s homeowners, especially those in transitioning neighborhoods. The declining city population has been reducing the demand for city housing, resulting in a decrease in property values. Not surprisingly, the neighborhoods showing the most significant decline in home prices tend to have higher foreclosure rates. Declining home values are likely contributing to foreclosures in these neighborhoods, and they may be a direct result of them as well, since foreclosed properties typically sell for appreciably less than surrounding properties. Our findings suggest that foreclosure is contributing to the decline of home prices in Buffalo, because foreclosed properties have accounted for a significant share of sales in the city. It is likely that these distressed properties are priced lower than they would be if sold conventionally. Lending, Lenders, and Loans More than anything else, our analysis of the lending process demonstrates the complex dynamics of foreclosure in Buffalo, and indicates that there are a number of different stories to tell. Lending, lender, and loan characteristics generally varied widely among individual foreclosures and among neighborhoods. In many ways, our findings on mortgage lending trends and foreclosures by loan type are not surprising. The 1990s brought deregulation to the financial sector and 65
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Residential Foreclosures in the Cit
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Table of Contents Acknowledgements
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Executive Summary The U.S. resident
Page 7 and 8:
Housing Condition In general, the c
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Additional Liens At the time of def
Page 11 and 12:
Chapter 1: Introduction In 2000, th
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• a brief evaluation of the econo
Page 15 and 16: Limitations of the Study The method
Page 17 and 18: Chart 2 Unemployment Rate: Buffalo-
Page 19 and 20: Chart 3 Residential Foreclosures in
Page 21 and 22: Map 2 Map 3 Foreclosures by Neighbo
Page 23 and 24: low rate of foreclosure in the pred
Page 25 and 26: tracts. Foreclosures were clearly b
Page 27 and 28: By separating out transitioning cen
Page 29 and 30: The relationship between income and
Page 31 and 32: Map 8 Residential Vacancies: City o
Page 33 and 34: Property values have been declining
Page 35 and 36: Chapter 5: Mortgage Lending Trends
Page 37 and 38: Chart 6 plots the trends in FHA and
Page 39 and 40: While the level of lending over the
Page 41 and 42: well in this low-income community.
Page 43 and 44: performance of those loans was extr
Page 45 and 46: are becoming more rare, they are li
Page 47 and 48: Table 12 Percentage of Foreclosed L
Page 49 and 50: Table 13 Percentage of Foreclosed L
Page 51 and 52: As Table 14 shows, high-cost and ve
Page 53 and 54: 1990 to 2000. Finally, we also foun
Page 55 and 56: Table 15 Age of Loan at Default: Fo
Page 57 and 58: Citywide, the average tenure of hom
Page 59 and 60: to arrange solutions to their finan
Page 61 and 62: Moreover, the unpaid balance on mor
Page 63 and 64: inordinately high loan amounts, and
Page 65: But the discrepancy between judgmen
Page 69 and 70: conventional loans were for a home
Page 71 and 72: the benefits of homeownership exten
Page 73 and 74: accuracy of comparisons among commu
Page 75 and 76: 73 Appendix B: Continued Foreclosur
Page 77: Johnson, Jennifer E. H., Diane Levy
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