News

Foreclosure numbers are down, but why?

Posted: July 19, 2011

By: Brad Davidzik
Attorney, Jeffrey Freedman Attorneys at Law

It seems as though every news source in the country is running a story about the decline in foreclosure numbers.

From the headlines, most people would assume the nationwide foreclosure crisis has officially ended.

RealtyTrac, for example, estimates Erie County saw approximately 16 foreclosure filings in April 2011. That number is way down from the monthly average of 134 filings per month in 2010.

Joe Kelemen of the Western New York Law Center, however, brings up a recent report from the Center for Responsible Lending that states as of early 2011, one out of nine homeowners with a mortgage was at risk of facing a foreclosure proceeding.

Additionally, an Empire Justice Center study (Mortgage Meltdown II) estimates that in late 2010, more than 2,200 households in Erie County were at least three months behind on their mortgages.

So, which numbers do we believe? The answer is that there are several factors influencing foreclosure statistics.

On a national level many banks instituted self-imposed foreclosure moratoriums in response to widespread allegations of robo-signing. (This is the modern-day equivalent of “rubber stamping” mortgage applications without an actual loan officer completing an examination of the applicant’s finances.)

Even though many of these moratoriums have expired, banks are still trying to revamp their foreclosure processes in an effort to provide more accurate documentation to the courts.

Locally, new filings have been seriously delayed due to a rule imposed by the Chief Administrative Judge of New York State, requiring banks’ attorneys to swear under oath as to the accuracy of foreclosure documents.

While it now appears that the banks’ attorneys have figured out how to handle this requirement, the additional work has slowed the filing process.

Nationwide, some parts of the country have seen improvements in the economy and it looks as though the peak of the foreclosure boom has passed. Mortgage default numbers across the U.S. have dropped slightly, which is a good sign for the future.

None of this, however, changes the fact that thousands of homeowners in Erie County remain in serious default on their mortgage loans. Unfortunately, local experts believe since the banks have now put processes in place to meet the new court requirements, these defaulted loans will make their way to the system by fall of this year.

The good news is that the foreclosure numbers are heading in the right direction, but not as swiftly as the headlines may lead one to believe.

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