Foreclosures in New York:
What’s Really Going On

Four years into the mortgage meltdown, the home foreclosure crisis in New York State continues unabated, particularly in low income neighborhoods and communities of color. Recent reports on foreclosures in New York cite a decline in foreclosure actions filed in New York courts. These reports, however, fail to include key information needed to understand the true foreclosure picture and formulate effective public policy.

According to NEDAP’s analysis of new mortgage default and delinquency data, foreclosure risk remains disturbingly high in New York. NEDAP found that more than 345,000 mortgages were in default or delinquent in New York State, in 2011.This staggering number – based on 90-day pre- foreclosure notices that New York now requires servicers to send to homeowners – indicates severe mortgage distress and risk of foreclosure and destabilization for huge numbers of families and communities throughout the state.

Download the full report.

The number of foreclosure actions (lis pendens) filed against New York homeowners has indeed dropped, notwithstanding the extremely high number of mortgage defaults and delinquencies. The decline in foreclosure filings, however, is largely attributable to banks’ inability to produce documentation required to initiate foreclosure cases, as New York courts heighten their scrutiny of banks’ foreclosure filings  NEDAP found that 90-day pre-foreclosure notices in New York City, for example, outnumbered foreclosure actions filed in New York courts 14 to 1.

Other findings include:

• More than 65% of 90-day pre-foreclosure notices were sent to homeowners in Long Island, New York City, Westchester County, Buffalo, Rochester, and Orange County.

• Southeastern Queens, Central and Eastern Brooklyn, and Staten Island had the highest number of pre-foreclosure notices in New York City, with as many as 150 mortgages in distress for every 1,000 housing units in Southeastern Queens neighborhoods.

• Two-thirds of the pre-foreclosure notices in New York City were sent to homeowners in communities of color.

• In New York City, pre-foreclosure notices outnumbered foreclosure actions filed in the courts 14 to 1. During the first half of 2011, 53,216 pre-foreclosure notices were sent, compared to 4,211 foreclosure actions filed in the courts.

Recommendations for New York State (condensed from report)

• The NYS Attorney General should investigate banks’ mortgage and foreclosure practices; bring meaningful enforcement actions; and seek strong remedies that prevent foreclosures.

• Prohibit lenders from filing wrongful foreclosure actions against New York homeowners.

• Allow New Yorkers to raise mortgage servicing abuses as a defense to foreclosure.

• Restore funding for foreclosure prevention legal services and counseling.