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

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Economic Context The rise in foreclosures has taken place in the context of a sluggish economy, but absent severe economic distress. Thus, whatever the cause of the increase— be it local or national— it is not surprising that the effect would be more evident in a city like Buffalo. Evidence suggests that the foreclosure process itself disproportionately affects low- and moderate-income homeowners because they lack the resources to avert or forestall foreclosure. Such homeowners clearly represent a considerable portion of the Buffalo housing market. Foreclosure Trends It is clear that Buffalo witnessed a large rise in residential foreclosures between 1990 and 2000. The incidence of foreclosure is up significantly in all city communities, and the largest increases are found in those communities with relatively few foreclosures in 1990. However, although foreclosures rose across the city, they have maintained a consistent spatial pattern, tending to concentrate in a concentric ring around the city’s periphery. Foreclosures by Neighborhood Characteristics Income Status Overall, 59 percent of foreclosures occurred in higher income census tracts. Higher income tracts also had a higher rate of foreclosure. But while foreclosure was more likely to occur in higher income census tracts, it was also more likely to occur in tracts that had experienced a significant decline in income than in tracts with little or no change. Minority Status The majority of foreclosures in the city of Buffalo, 63 percent, occurred in minority census tracts. Over half the foreclosures in minority tracts were located in one of the eleven tracts that had transitioned from white to minority over the 1990-2000 period. Clearly, those census tracts that are transitioning from white to minority are experiencing the greatest incidence of foreclosure, particularly those areas undergoing rapid change. 4
Housing Condition In general, the city of Buffalo tends to have much of the region’s oldest housing. Yet surprisingly, foreclosures are most concentrated in communities with relatively newer, better conditioned housing and comparatively high homeownership rates. The Real Estate Market A generally reduced demand for housing has contributed to an overall decline in property values. The communities showing the most significant decline in home prices tend to have high 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. Mortgage Lending Trends Foreclosures on FHA and Conventional Loans Foreclosure rates in Buffalo tended to be higher on Federal Housing Administration (FHA) mortgages than on conventional mortgages. However, in terms of distribution, foreclosures were more likely to be on conventional loans: about 59 percent, versus 38 percent for FHA loans. Purchase, Refinance, and Assumed Loans Citywide, the loans taken by foreclosed borrowers were more likely to be for the purchase of a home than for a refinancing, and purchase loans overall performed somewhat worse than refinancing loans. Purchase mortgages accounted for 56 percent of foreclosures, compared with 34 percent for refinance loans. Even higher concentrations were found in Buffalo’s East Delavan and North East communities. 5
Page 1 and 2: Residential Foreclosures in the Cit
Page 3 and 4: Table of Contents Acknowledgements
Page 5: Executive Summary The U.S. resident
Page 9 and 10: Additional Liens At the time of def
Page 11 and 12: Chapter 1: Introduction In 2000, th
Page 13 and 14: • 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
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Moreover, the unpaid balance on mor
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inordinately high loan amounts, and
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But the discrepancy between judgmen
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those with the highest rate of mino
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conventional loans were for a home
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the benefits of homeownership exten
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accuracy of comparisons among commu
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73 Appendix B: Continued Foreclosur
Page 77:
Johnson, Jennifer E. H., Diane Levy
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Residential Foreclosures in the City of Buffalo, 1990-2000 - Federal ...

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