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

Subprime Lending
Subprime lenders in Buffalo originated slightly more than one-fifth of all
foreclosures in 2000. Two-thirds of the foreclosures attributable to subprime lenders
occurred on refinance mortgages, while a third were associated with purchase mortgages.
Two low-income minority communities exhibited an exceptionally high share of
foreclosed loans originated by subprime lenders: Ellicott-Masten (45 percent) and East
Side (36 percent). This result is consistent with research showing that subprime lending is
more prevalent among minorities. However, this association between subprime
foreclosures and socioeconomic characteristics does not hold true in all cases.
Additionally, there appears to be little relationship between overall foreclosure rates and
subprime foreclosures, as the two communities with the highest foreclosure rates, North
East and East Delevan, did not show high shares of foreclosures on subprime loans.
Borrower Circumstances at Foreclosure
Age of the Loan
Overall, 39 percent of loans foreclosed in 2000 were young loans that moved into default
in less than four years, while 27 percent were seasoned loans older than eight years. The
average loan was 5.8 years old at the time of default. Despite Buffalo’s high share of
foreclosures on young loans, 61 percent were more than four years old. Thus, the older
foreclosures alone represented a significant growth in foreclosures over the 1990s.
The shares of loans that foreclosed in less than four years in the Buffalo communities of
Ellicott-Masten (59 percent), East Side (54 percent), and Riverside (52 percent) were well
above the city’s overall share.
Owner Tenure
The average tenure of city homeowners whose loans foreclosed in 2000 was 8.6 years.
Foreclosures were evenly distributed among short-, medium-, and long-tenure
homeowners, suggesting that the circumstances behind this aspect of foreclosures varied
widely.
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