As mentioned previously on the Bronx News Network, the Governor signed into law a new foreclosure bill on Tuesday in the Bronx, sponsored by State Senator Jeffrey Klein. Nonprofit community groups throughout the City and State worked hard on this bill and really feel like it is a good piece of legislation.
I was unable to attend the signing because of a meeting with other groups doing foreclosure research at the NY Federal Reserve that morning. Here are a few highlights of this research and data, some of which is available online:
The number of foreclosure filings (lis pendens) continues to rise in NYC, though the number of auctions remains mostly flat. Some of the causes may include banks waiting for the market to recover, backlog at the courts, actual workouts/modifications taking place, and homeowners selling their properties before the foreclosure is completed.You can find a lot more data on mortgages (and other types of credit like auto loans, credit card debt and student loans) at the county and zip code levels on the New York Federal Reserve website. New loan performance data will be released on their site in the new year.
According to NeighborWorks, nationwide homeowners in foreclosure are able to achieve much more favorable loan modifications if they are working with a nonprofit counselor (call 311) to the tune of $450/month in lower payments. These approved counselor always provide their services for free. (In other words, if someone asks you for money to help modify your mortgage, it's a scam!)
According to the Fed, loan modifications that reduce principal instead of just the interest rate led to a significantly lower level of re-default within 12 months, even though the monthly payments would be the same under the two different types of modifications. The reason may be partly psychological, as the principal reduction may give the owner an actual equity stake in the home.
Speaking of equity, the Fed shows how the homeownership rate in Las Vegas is dramatically lower if you only consider homeowners that have an equity stake (think owing less on your mortgage than what your home is worth). Instead of the 60% ownership rate measured by the Census, the effective rate (based on the CaseShiller index of home value versus the mortgage amount) show that only about 15% of households have an equity stake in a home. In other words, 45% of all Las Vegas households owe more on their mortgage than their home is worth (also referred to as being upside down or underwater); another 40% are renters.
Locally, there have been over 300 mortgage foreclosure filings on 1-4 family homes in just the northwest Bronx thus far in 2009. Borough wide, there have been more than 2,100 filings on these types of homes (in 2008 there were 1,619 and just half of that as recently as 2005), totaling about 4,200 units of housing. There have been an additional 192 foreclosure filings on apartment buildings with at least 5 units this year in the Bronx. These buildings are home to about 3,700 households. That means in the Bronx in 2009 (and we still have two weeks to go), about 9,000 households saw their building/house go into foreclosure, either as an owner or as a tenant.
There were probably between 2,200 and 3,000 Bronx renter households who don't have the protections of rent stabilization who saw their building go into foreclosure this year. The new foreclosure law will allow tenants to remain in their homes for the rest of their lease or for 90 days after the foreclosure is completed, whichever is longer.