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New York Fed: Seven Percent of Upstate Subprime Loans in Foreclosure

The Federal Reserve Bank of New York recently released "A Look at Upstate New York’s Subprime Mortgages in Foreclosure," a report intended to help local housing service providers identify the upstate counties with higher levels of subprime foreclosures and strategically design assistance programs for the expansive region.
The New York Fed's examination of upstate New York's owner-occupied subprime mortgages reveals that the region has fewer subprime loans per 1,000 housing units than New York state as a whole or the United States. Additionally, subprime loans analyzed in the study were performing better than those in the state and the country. The share of subprime mortgages in foreclosure in upstate New York is 7 percent—considerably less than 14 percent for New York state and 12 percent for the nation.
Still, the New York federal bank said subprime mortgage conditions remain a concern upstate. The analysis, based on a snapshot of a subset of upstate home loans, showed pockets of relatively high concentrations of subprime foreclosures in counties with large urban centers. Six of the 48 counties account for half of upstate New York's subprime mortgages in foreclosure.
Monroe and Erie counties alone account for about 25 percent of upstate’s subprime mortgages in foreclosure, with more than 200 each. Another quarter of the region's subprime foreclosures is represented by Onondaga, Albany, Schenectady, and Rensselaer counties, with between 100 and 199 each. The remaining half is spread across forty-two counties, with each having fewer than 100 subprime foreclosures.
In addition, the New York Fed said, further examination of these loans uncovered striking similarities in underwriting patterns across the region. Properties in upstate New York have considerably lower loan values than those in New York state or the United States, reflecting the lower property values in the region.
Certain loan characteristics—such as the combined loan-to-value ratio at origination, including junior liens, and borrower credit score at origination—are fairly similar across upstate New York, New York state, and the country. However, the bank said, they are consistently weaker for loans in foreclosure than for those not in foreclosure.
The New York central bank noted that the share of loans lacking complete documentation is consistently higher for mortgages in foreclosure than for other mortgages. However, the bank said upstate’s share of no-doc/low-doc loans is noticeably lower than that of the rest of the state or the nation.
In upstate New York, the number of home mortgages in foreclosure continues to be a vexing concern, the New York federal bank said. Homeowners who are struggling to make or have fallen behind on their mortgage payments may require mortgage counseling, loan modifications, or other forms of assistance in order to avoid foreclosure. Yet the challenges of how best to plan, scale, and prioritize such assistance are complicated by the sheer size and diversity of upstate. The Federal Reserve Bank of New York noted that the lack of timely and complete loan data is another perplexing aspect of home retention efforts in the region.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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