With home foreclosures, the Syracuse area is luckier than many. But the area still has a sharp increase in homes lost to foreclosure, reflecting the nation’s growing economic problems and the burst of the housing bubble.
A Democracywise study of Realtytrac, an online database of the nation’s foreclosures, found that the number of foreclosures in Syracuse is up 77 percent since 2007. Still, Syracuse has the lowest foreclosure rate of the nation’s largest metropolitan areas.
And experts expect the number of foreclosures will continue to grow.
“While much of the mortgage problem in some states was a result of overbuilding, poor underwriting and incorrect credit pricing, fundamental economic factors are becoming more important now,” Jay Brinkman, an analyst with the Mortgage Bankers Association said. The Mortgage Bankers Association, based in Washington, D.C., is a national association representing 400,000 members in the real estate and finance industry.
“Job losses and general economic deterioration make the 2009 outlook worse,” Brinkman said.
The process of foreclosure occurs when a lender seizes control of a property after an owner is unable to make payments on a loan. Foreclosures begin when a lender files a public notice of foreclosure.
Overall, the foreclosure statistics from Realtytrac are bleak:
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Nationally, since October, 2007, the number of foreclosures has increased by 25 percent —from 702,330 homes last year to 936,439 homes this year.
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That’s one in every 452 homes in the U.S. receiving a foreclosure notice.
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In New York, this year alone, 16,025 foreclosure notices were filed—a 61 percent increase from last year.
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In the Syracuse area, one in every 1,000 homes has been hit with a foreclosure notice.
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In the city of Syracuse, 255 homes have been foreclosed on. In Onondaga County, the number is 495.
The reasons for the growing number of foreclosures, experts say, include bad subprime mortgages and the slowing economy.
Subprime mortgages are often mortgages granted to low-income households. These mortgages typically require little or no down payment, but have an adjustable interest rate. As home values fall, banks often increase the interest rate of a mortgage in order to make money. For many homeowners, that higher interest rate made their mortgages unaffordable.
“I think what we saw in the 1990s was a government emphasis on increasing homeownership rates,” said Paul Driscoll, neighborhood planning director for Home HeadQuarters. The group is a not-for-profit agency that works with struggling and first-time homeowners. “This led banks to give loans to people that really shouldn’t have been granted loans.”
Driscoll of Home HeadQuarters and other experts suggest that consistent home values and little building activity have allowed Syracuse to keep its foreclosure rate lower than other places—at least for now.
“Syracuse has not seen the huge boom in the number of homes being built,” Driscoll said. “We just don’t have a large number of people that need mortgages or want to own homes in Syracuse.”
But Driscoll, like many, is concerned about the future. “It’s definitely going to get worse,” he said.
Statistics from the Mortgage Bankers Association increasingly show that foreclosures are expanding beyond the subprime market. The ripple-effect is now expected to hurt prime fixed-rate mortgages, according to the trade group.
The increasing number of foreclosures has already started to show up here in Syracuse. Organizations like the Syracuse Housing Authority, which provides public to eligible low-income families, has seen increase in the number of people seeking public housing.
Applicants can now spend three months on the housing authority’s waiting list, David Paccone a management analyst for the housing authority, said.
For now, many homeowners dealing with foreclosures are stuck in a sort of limbo with much help. Proposed solutions to foreclosures have been slow in coming. Some of the proposed solutions include:
- Hope Now
Hope Now is a partnership between the U.S. Department of Housing and Urban Development and approved counseling agencies. With money from HUD, these counseling agencies, like Home HeadQuarters in Syracuse, provide free counseling services. These organizations help homeowners renegotiate settlements with banks to avoid foreclosure. According to press releases, Hope Now has helped more than 2.7 million people avoid foreclosure since July, 2007.
- New York State Hope for Homeowners Act
The Hope for Homeowners law is a newly enacted law that requires lenders to notify borrowers 90 days in advance about foreclosure. This law is designed to allow the homeowner and the bank to renegotiate the foreclosure. Critics of the law argue that it usually just delays the foreclosure process.
- Homebuyer Education
Several organizations like Home HeadQuarters offer homebuyer classes to teach potential homeowners how to avoid potential pitfalls like subprime loans. Participants who complete the course receive a certificate that increases their chance of getting a first-time loan. Home HeadQuarters also provides up to $3,000 to help some families buying a home in Syracuse or Onondaga County. The money can only be used to help defray the cost of required down payments and closing costs. To be eligible, families must have a signed purchase agreement for a single-family or two-family home valued at last then $99,900. They must also have a proof of a mortgage from a bank or credit union. Finally, participants must also fall below 80 percent of the HUD median income guidelines and not have assets that exceed more than $7,500.
(Ashley Pettigrew is a senior with dual majors in newspaper journalism and policy studies)
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