The feds don’t have it, the state doesn’t have it, but Erie
County has important analysis of loan foreclosures in the area thanks to the
diligence of the Western New York Law Center.
Yesterday at 10AM, Western New York Law Center, in conjunction
with Western New York AmericorpsVista, gave a presentation of their intensive
study of the foreclosure process on WNY. Included in the report was an
analysis of all of the loans that entered the legal foreclosure process in all
of Erie County during 2007 and 2008. The entire report can be viewed in pdf format here.
The study was pursued at the regional level because Erie
County requires the recording of foreclosure initiations due to state law,
though federal and state sources do not routinely analyze foreclosure
“These are records historically kept for legal
purposes,” explains Kathleen Lynch, Esq., of WNYLC. “They’re not set
up for analysis, but we’ve realized that no current method to collect loan data
exists. Through our research, we found out that nearly 50 percent of loans in
Erie County are not reported to the federal government because non-bank lenders
were not subject to the same laws as larger financial institutions.”
Lynch said that to find out who was lending in our market, she
had to rely on the lis pendens that has to be filed any time legal foreclosure
is being started. “There is one filed for every foreclosure, but
there’s no way to capture a default loan until it’s filed,” Lynch said.
The total number of lis pendens filings
turned out to be 5,000 in Erie County. Some details were surprising to many in
the room at the presentation according to AmericorpsVista’s Patrick Metzger,
who was present. He points out the following:
In 2007, the City of Buffalo, with 1,110 filings, had four times the number of
lis pendens filings than the next highest municipality in Erie County, making
up over 40% of apparent foreclosures in the county. The next highest was
The top five banks that originated the most lis pendens only originated 244
loans, and yet they filed to begin the foreclosure process on 880 properties.
One of the top five, Deutsche Bank National Trust Company, filed 247 lis
pendens, but they didn’t originate a SINGLE mortgage that went into foreclosure
in Erie County in 2007 and 2008. (This means they didn’t directly loan money
out to any local homeowner, but instead purchased mortgages from other banks
that had made the loans, and subsequently those mortgage loans entered
“This study has been a big lesson learned. We need to
routinely collect information on loans so that the people can be helped through
a consumer agency, as devised by our new president.”
Lynch said that Governor Paterson introduced legislation just
before the legislation “stopped working” that would make the
originators of loans responsible for reporting loans and foreclosures to give a
better sense of what’s out there and who owes what to whom. In the past,
non-banking lenders had no legal, ethical, feduciary responsibility to clients.
Many of these loans had a fixed rate for first two years that was subject
to go up every 6 months until the loan became unaffordable. “The market
has changed drastically,” Lynch says, noting that foreclosure rescue scams
are as bad or worse than the original debt. Her objective through WNYLC
is to let consumers know that there is free counseling available.
“We have a good pic of these loans now, and we can use it
to advocate,” she says. “New York State enacted a law in
September of this year that requires a settlement conference, getting the homeowner
and lender in same room, and the AmeracoreVista paralegals help in court. We
can help. People don’t have to be afraid of lis pendens letters.”
For more information go to WNYLC.