The 12303 ZIP code has the most subprime mortgages of any Capital Region ZIP code, according to a report released Friday by the Federal Reserve Bank of New York in Buffalo.
The area, which includes parts of Guilderland, Colonie, Rotterdam and Schenectady, contains 310 owner-occupied residences with subprime loans.
To view a breakdown by ZIP code of subprime mortgages in Albany, Fulton, Montgomery, Saratoga, Schenectady and Schoharie counties, click here.
As of October, 19 homes in the ZIP code were in foreclosure, but about 50 were in default by at least 30 days. An additional 70 of the adjustable-rate mortgages will likely reset to higher rates between April and September 2008, according to the Fed.
“Whether they’re in Rotterdam or Schenectady, there’s going to be an economic impact that’s going to be felt if those houses are foreclosed upon,” Schenectady Mayor Brian Stratton said Friday.
The Fed report provides one of the most expansive looks at how subprime mortgages spread to all corners of the state, from poor inner cities to wealthy suburbs to sparsely populated rural areas. And as the status of the 12303 area illustrates, the subprime woes that plagued the nation’s housing and credit industries last year are only beginning.
“We’re anticipating more calls as we get further out in the year, and in a couple of months it could pick up,” said Patricia Hall-Murray, a housing counselor for Better Neighborhoods Inc., a Schenectady home ownership advocacy organization that assists homeowners facing foreclosure.
Nationally, an estimated $514 billion in variable-rate loans will reset to higher rates this year and $398 billion in 2009. Seventy percent of the 2008 loans and 37 percent of the 2009 went to subprime borrowers, according to Banc of America Securities, Bank of America Corp.’s investment banking arm.
The surge in forthcoming adjustments reflects the popularity of ARMs during the final years of the housing boom, especially between 2003 and 2005. ARMs allow borrowers to pay low, introductory “teaser” rates for two to five years. After the rates reset, borrowers can get stuck paying significantly higher monthly mortgage bills.
The potential tsunami in rate resets prompted the Bush administration and major lenders in December to hammer out an agreement to freeze rates for five years.
The rate freeze applies to subprime loans issued between Jan. 1, 2005, and July 31, 2007. While that voluntary move by lenders should allow some borrowers to at least temporarily forestall foreclosures by keeping mortgage bills at manageable levels, many others will not be so fortunate, industry experts said.
“We’re going to be inundated with calls seeking assistance,” said Tracy Petersen, a housing counseling coordinator for the Affordable Housing Partnership in Albany.
Other areas with high numbers of subprime loans include the 12078 ZIP code of Gloversville and the 12010 ZIP code of Amsterdam, which had 264 and 226 in October, respectively. Only about 14 of those Amsterdam loans were in foreclosure, but 24 of them were 30 to 59 days overdue. Sixteen of those loans will reset between April and September while 28 will reset between October 2008 and September 2009, according to the Fed.
“It has a major impact on the economy. We want to see people stay in their homes,” said Sen. Hugh Farley, R-Niskayuna.
Area housing counselors said major lenders have recently become more open to helping borrowers restructure their loans in a bid to prevent more foreclosures.
The Fed said it issued the report, which examines loans securitized by issuers and sold into mortgage-backed securities, to help local governments and community groups understand the extent of the problem, which is far less pronounced in the Capital Region than elsewhere in the state.
For example, the 11434 ZIP code of Jamaica, Queens, has 1,415 subprime loans and the 10940 ZIP code of Middletown has 863.
Farley said the state Department of Banking should soon submit to him legislative proposals that would create criminal penalties for lenders who engage in fraud, education programs for homeowners facing foreclosure and changes to the foreclosure process.
In Schenectady, Stratton said he recently participated in the creation of a public service announcement that will soon air on television and radio stations. The announcement will advise homeowners in dire straits on ways to receive housing assistance.
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Categories: Schenectady County