Mortgage foreclosures continue at high pace

CAPITAL REGION — A decade after the subprime mortgage crisis put millions of Americans out of their homes, dozens of houses are still falling into foreclosure each month in the Capital Region.

The trend continues despite a much-improved economy, more-careful mortgage industry practices and an infrastructure of support that has been created for borrowers facing the loss of their homes.

“We have noticed that the number of foreclosures have not gone back to pre-Great Recession levels,” said James Flacke, executive director of Better Neighborhoods Inc., a Schenectady nonprofit that provides assistance to homeowners facing mortgage foreclosure.

The problem often comes down to a family crisis, he said, such as illness, death, divorce, loss of job, loss of government benefits, or something else that takes away the ability to sign the check each month.

“These are what BNI sees,” Flacke said. “People don’t just choose to not pay their mortgage — it simply never happens.”

Asked why this might be more common now than before the subprime crisis, he noted there have been a dozen years of middle-class incomes not rising as fast as expenses.

“This is where it comes home to roost.”

Statistics compiled by ATTOM Data Solutions show the following combined foreclosure totals for Albany, Fulton, Montgomery, Saratoga, Schenectady and Schoharie counties:

2006: 156
2007: 386
2008: 495
2009: 451
2010: 554
2011: 211
2012: 330
2013: 377
2014: 625
2015: 902
2016: 1,056
2017: 777

The 2017 total is for 11 months — December numbers were not yet available. The other years count all 12 months. And the totals are only mortgage foreclosures by lenders — foreclosures by municipalities for nonpayment of taxes are not included.

The head of another non-profit that offers housing counseling, the Affordable Housing Partnership in Albany, said the foreclosure rate never really slowed after the subprime crisis.

“The basic reasons are still loss of income, primarily, or health reasons, or divorce,” Executive Director Susan Cotner said. “The big economic downturn crisis has passed but still people struggle with their mortgages all the time.”

ATTOM found that New York had the 10th highest rate of foreclosure among the 50 states as of September: one foreclosure for every 1,671 housing units. ATTOM also found that foreclosure activity of all types — default notices, repossessions and auctions — in the third quarter of 2017 was at its lowest level in 11 years nationwide.

The Capital Region apparently has not been following the downward trend.

One thing struggling New York homeowners have in their favor is an aggressive stance by state agencies against scammers preying on those in foreclosure. Another is HOPP, the Homeownership Protection Program established by the state attorney general and funded with settlement money paid by the finance industry in the wake of the subprime crisis. HOPP offers free help from counseling agencies such as the Albany County Rural Housing Alliance, Homefront Development Corp, BNI and the Affordable Housing Partnership.

“Not every state has experienced help at no charge,” Cotner said.

Louise McNeilly at the Affordable Housing Partnership said she tracks housing stress through notices of arrears — warnings that lenders send to borrowers who are behind on payments and at risk of foreclosure.

There were 1,681 such notices issued in the Capital Region from Nov. 21 to Dec. 20, 1,500 one month earlier, and 1,528 two months earlier. They had been averaging about 1,400 a month.

“It’s not a good trend,” McNeilly said.

“One of the best things a family can do if they get a notice is attend a settlement conference,” Cotner said. “That is a great way to connect with housing counselors.”

Flacke at BNI said borrowers often have other issues beyond lack of cash.

“Sometimes people in emotional crisis hide from their problem,” he said. “I can’t tell you how many clients show up when they finally receive the summons and they’ve never completely dealt with the problem that led to the foreclosure.”

BNI has about 30 to 50 active foreclosure cases it is trying to assist at any given time. There’s no single strategy for preventing the foreclosure or lessening its impact, Flacke said. “Everybody’s case is so different.”

There is a general framework BNI starts with, though:

Help the client understand where the household’s money comes from, where it needs to go, and where it actually goes, then put together a household budget.
Obtain the details of the mortgage from the lender.
Try to work out a settlement between borrower and lender.

A settlement that averts a foreclosure can take a few paths:

Agreement on a deed in lieu of foreclosure, in which the lender essentially cancels the loan and takes the property, and the borrower walks away without debt.
Restructuring the entire loan.
Paying off some of the loan with help from HOPP and restructuring the rest.

“Some clients can get their financial condition back in a healthy place,” Flacke said, and stay in their homes.

Just as every borrower is different, every lender is different, he said. Some small local lenders and some large national corporations are easy to reach and eager to cooperate. Others aren’t.

“We have some banks at every level that are very difficult to deal with,” Flacke said.

The Federal Reserve Bank of New York reported that American household debt increased 0.9 percent between the second and third quarters of 2017, the 13th straight quarterly increase. It stood at $12.96 trillion as of Sept. 30, $280 billion more than its peak in 2008 during the subprime crisis.

Mortgages accounted for the majority of this debt — balances stood at $8.74 trillion on Sept. 30, an increase of $52 billion from three months earlier.

As of Sept. 30, $630 billion of household debt was in some stage of delinquency and $408 billion was seriously delinquent, or at least 90 days late.

FORECLOSURE ADVICE

The New York state Department of Financial Services offers the following advice to people having trouble making mortgage payments:

Contact your lender or loan servicer immediately, and respond to their mail or phone calls promptly. Provide the information they request and keep records of everything.
Contact a non-profit housing counseling agency such as Better Neighborhoods Inc. or Affordable Housing Partnership.
Seek assistance from a lawyer.
Watch out for scams — never submit mortgage payments to a third party, beware of anyone who promises to “save” your home if you transfer the deed to them, and beware of anyone who offers help for an advance fee, which is illegal in New York in most cases.
Call the Department of Financial Services at 1-800-342-3736 if you think you are a victim of mortgage fraud.
Because rental properties are the subject of many foreclosure actions — 56 percent in New York, by one estimate — tenants should be aware of their rights and responsibilities during the foreclosure process; rent, for example, is still due each month.

FORECLOSURE TOTALS

ATTOM Data Solutions compiled statistics on foreclosures in the most recent 12 months available (December 2016 to November 2017) and in the most recent 12 years (January 2006 to November 2017) for the following Capital Region counties: