The mortgage crisis is accelerating locally this summer, as the number of Capital Region homes in various stages of foreclosure during the second quarter more than tripled over the year.
As multibillion-dollar housing relief legislation passed last week by Congress heads toward the desk of President Bush, heightened foreclosure activity is spreading through U.S. cities. Ninety-five of the nation’s 100 largest metropolitan areas posted annual foreclosure increases during the second quarter, compared with 90 for the first quarter.
In the five-county area around Albany, foreclosure activity rose 277 percent to 1,062 by June 30, compared with a year earlier. Foreclosure activity, which includes default and auction notices plus repossessions, was up 75 percent from 608 during the first quarter, according to RealtyTrac.com, an Irvine, Calif., nationwide foreclosure tracking firm.
Although foreclosure activity remains spotty in the region — as compared to more problematic metro areas in Nevada, Florida and California — it is growing. By the end of the second quarter, one out of every 356 households in Albany, Rensselaer, Saratoga, Schenectady and Schoharie counties was in various stages of foreclosure. That ratio for the first quarter was one out of every 622 households.
Nationwide, foreclosure activity over the year rose 121 percent to 739,714, a 14 percent increase from the previous quarter.
“It’s getting bad out there,” said Barbara Whipple, president-elect of the Capital Region Bankruptcy Bar Association.
Whipple said her Latham law office is getting unusually busy for summer. At U.S. Bankruptcy Court in Albany, total second-quarter bankruptcy filings rose 35 percent over the year to 1,158. During that period, non-business Chapter 13 filings, which can stay foreclosure actions, jumped 25 percent to 372.
New Yorkers are increasingly struggling with mortgage and credit card bills as record-high gasoline and food prices outpace lethargic wage growth. Consumer prices in June rose 5 percent from a year earlier, the nation’s largest 12-month increase since 1991.
Still attempting to defuse economic catastrophe in an election year, federal lawmakers followed up on their winter economic stimulus package with a housing rescue bill. It promises everything from a $7,500 tax credit for first-time homebuyers to lender forgiveness initiatives designed to help struggling homeowners refinance into lower-cost Federal Housing Administration-backed mortgages.
In a rare Saturday session, the Senate passed the housing aid legislation, following the House’s approval of it Wednesday. After months of opposing such measures, the Bush administration has indicated the president will sign off on the bill, which promises to help 400,000 families keep their homes.
Under the legislation, FHA could insure up to $300 billion in mortgages. It also increases to $625,000 the amount of home loans that government-sponsored mortgage giants Fannie Mae and Freddie Mac and the FHA can insure. Also included in the bill is a provision that would send $3.9 billion in Community Development Block Grants to help revitalize blighted areas hit hardest by the foreclosure crisis.
“If you’re already in foreclosure, this doesn’t help you. It’s going to remain a problem,” Whipple said.
Whipple said the housing rescue bill will better aid homeowners who are 30 to 60 days behind on their mortgages — still weeks away from when most foreclosure actions start.
Realtors are hopeful the $7,500 tax credit will spur sluggish housing sales by luring more first-time buyers into the market, as a similar measure did in the mid-1970s. The tax credit is available to people who bought or will buy their first home between April 8 of this year and July 1, 2009.
“We’ll be looking to people who have been sitting on the fence,” said Mary Trupo, a spokeswoman for the National Association of Realtors, a Washington trade organization.
The tax credit works like a no-interest loan, which homeowners have to repay over 15 years. During the first half, single-family home sales in the greater Capital Region slumped 17 percent, compared with the same period of 2007.
As for relief for homeowners in foreclosure, area housing assistance officials are placing their hopes in a bill that the state Legislature passed last month. It was sent Friday to the desk of Gov. David Paterson, who supports it.
The foreclosure relief legislation would mandate court-supervised settlement conferences between lenders and borrowers deep in default. It would also require lenders to notify borrowers 90 days before a foreclosure action begins and list local counseling agencies.
“That will definitely help … We’ll definitely see [client] volumes increase,” said Stephanie Galvin, the senior housing counselor for the Albany County Rural Housing Alliance.