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

enewed efforts to increase homeownership among minorities and people with low and
moderate incomes. These efforts appear to have been successful in raising the volume of
lending in Buffalo, as total lending grew 24 percent from 1992 to 2000. However, the rise
largely results from an increase in conventional lending— both prime and subprime— a
pattern observed in much of the United States and concentrated in Buffalo’s higher
income communities.
Federal Housing Administration loans were found to foreclose at a higher rate
than conventional loans, although possibly less so than might be expected. However,
because FHA loans accounted for a substantially smaller share of lending than did
conventional loans, FHA loans made up a smaller share of foreclosures. Nevertheless,
Buffalo had nearly 300 foreclosures on FHA loans in 2000— almost 50 percent more
than the total of all foreclosed loans in 1990— and FHA loans foreclosed at an especially
high rate in some parts of the city.
Subprime lending was responsible for a sizable share of Buffalo foreclosures as
well, totaling about one-fifth of all foreclosures. Most foreclosures on subprime loans in
Buffalo were originated later in the decade, and thus are likely responsible for a portion
of the rise in foreclosures over that period. However, the share and patterns of subprime
foreclosures found in this study suggest that they are only partly responsible for the
overall rise in foreclosures from 1990 to 2000.
Overall, we found the characteristics of foreclosures in Buffalo to be strikingly
similar to those in Rochester in the 1990s. However, the cities exhibited some differences
in the sources of foreclosures. Foreclosures on FHA loans were more prevalent in
Rochester, while foreclosures on subprime loans were more prevalent in Buffalo.
Rochester’s higher proportion of FHA foreclosures is likely due to its relatively higher
volume of FHA lending. The difference in foreclosures on subprime loans is less clear; it
could, for example, be related to the timing of the two studies. Because the growth in
subprime lending is a recent occurrence, the impact on foreclosures may have been
greater in 2000 than in 1998. However, evidence from other research suggests that
subprime lending is more common in Buffalo than in Rochester, at least among blacks.
Perhaps our most noteworthy finding regarding loan types is that more than 40
percent of foreclosed loans were neither FHA nor subprime. The majority of these prime
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