Local homeowners are facing foreclosure at record rates, as the economy continues to falter.
But, despite those record home foreclosures, Syracuse fares better than much of the country.
“Syracuse wasn’t exempt. But we didn’t have a catastrophe either,” said David Manzano, director of the Greater Syracuse Association of Realtors.
The Department of Housing and Urban Development examines statistics from RealtyTrac, a company that tracks foreclosure statistics, to paint this picture:
•Nationally, home foreclosures have risen by 30 percent since February 2008.
•In Syracuse, home foreclosures nearly tripled from 2007 to 2008 — with 365 in 2007 to 1,028 in 2008. They remain near the high mark so far for 2009, with 1079.
•In Syracuse, one out of 785 homes was foreclosed in 2007.
•In 2008, that number was three times higher – one out of 278 Syracuse homes foreclosed.
•The 2008 foreclosure rate makes Syracuse it number 99 among other U.S. cities.
Syracuse has been less hard hit by the foreclosure crisis, experts say, because the housing market’s prices are more stable and because fewer homebuyers took out risky mortgages.
But nationally, it was another story. Home values in other regions, like Nevada, Florida, and California, ballooned absurdly fast for no substantive reason, housing experts said. That’s usually a bad sign, experts say, because unjustifiably high values are likely to tumble eventually.
To make matters worse, many lenders gave mortgages to buyers who could not pay back the loans, say experts on the housing industry.
The key to the lower foreclosure rate in Syracuse, experts say, is the area’s stable housing market. That means that homes values do not rise and drop sharply. And local homebuyers tended to avoid risky loans, without the temptation of houses with ballooning prices.
“Our housing prices have always been affordable,” said Manzano of the Syracuse Realtors’ group. Here in Syracuse, properties can go up 7 to 10 percent per year, Manzano said. “But in Vegas, California, and Florida, it went up more,” he said. Those cities saw increases of more than 20 percent in some cases, he added.
In turn, high home prices and changes in lending practices can entice homeowners with poor credit into mortgages they can’t afford, said Gary Thurber, an official with Consumer Credit Counseling Service of Central New York. In the housing boom, some lenders gave mortgages to lower-income homeowners who previously would not have been considered good credit risks because of their potential inability to repay their loans. Many of those over-extended homeowners fell behind in their payments, triggering the national foreclosure crisis.
But here in Syracuse, credit counselor Thurber said, fewer borrowers took out risky loans, such as those with variable interest rates. Those loans often start with low interest rates and can quickly rise to levels beyond the borrower’s ability to pay. “We didn’t have as many people taking adjustable-rate mortgages,” he said. “Other people in the country were less conservative.”
About 3 to 4 percent of homebuyers in Central New York took out adjustable rate mortgages last year, Thurber said. That’s about the same percent as over the last 10 years, he said.
Now the federal and local governments are scrambling to help homeowners and the real estate industry. The potential solutions include:
•Empower foreclosure judges to renegotiate mortgage rates
Lenders would be encouraged to modify loans for troubled borrowers. In cases where that’s not enough, judges would get the authority to modify existing mortgages for families who file for Chapter 13 bankruptcy. This proposal, called the “Helping Families Save Their Homes Act,” has been approved in the House of Representatives. Rep. Dan Maffei, D-DeWitt, voted in favor. The bill now depends on Senate action.
Nationwide, about 10 percent of the expected 8.1 million foreclosures over the next four years should be prevented under the act, say its supporters. Here in the 25th Congressional District, which includes Syracuse and Onondaga County, the legislation would spare 15 percent — or 1,753 — of the projected 13,632 foreclosures in the next four years, according to the Center for Responsible Lending in Washington, D.C. The Center describes itself as a non-partisan opponent of abusive lending practices.
•Provide refinancing option for borrowers
The Treasury Department proposed this in its package of solutions. The plan would provide a refinancing program for borrowers with a good repayment record but whose homes’ value has tumbled. Borrowers could then take advantage of current lower mortgage rates.
After primary mortgages are lowered, the plan would also automatically lower secondary mortgages, or liens. Borrowers with variable-rate mortgages can switch to “a more stable mortgage,” said a Treasury press release.
•Work with legitimate credit counseling agencies to come up with a plan to pay off mortgages and debts
Government-approved centers can provide advice and guidance for troubled homeowners. Agencies like Home HeadQuarters in Syracuse, for example, can help with legal and budgeting advice. And they can help homeowners sort through piles of paperwork and act as an advocate before lenders.
(Ricardo Ramírez is a graduate student in magazine-newspaper-online journalism)
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