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DiNapoli: NY home foreclosure filings decline

ALBANY — New mortgage foreclosure filings dropped last year in New York while still edging up nationally, according to state Comptroller Thomas DiNapoli, who cautioned the fallout continues from the U.S. housing crisis and recession.

The state decline can be attributed partly to a temporary suspension of foreclosure activity by banks, not an improvement in the market, DiNapoli said.

“In general the foreclosure crisis in New York state and New York City was less severe than in other parts of the country,” he said. “But neighborhoods in Brooklyn, Queens and the Bronx were especially hard hit.”

In November 2009, New York lawmakers passed a bill giving homeowners and renters more protection, expanding a mandatory 90-day pre-foreclosure notice to all types of home loans — not just subprime mortgages — and letting renters living in foreclosed properties remain for the remainder of their lease or 90 days, whichever is longer.

Last October, the state’s chief judge imposed rules requiring lawyers handling foreclosures to verify that all paperwork is accurate following complaints that lenders nationwide cut corners on paperwork and legal procedures as they moved to seize homes.

Foreclosure filings dropped from 50,000 to 43,900 statewide last year, while rising nationally from 2.8 million to 2.9 million, according to the comptroller’s office. That lowered New York to 42nd place among states. Nevada had the most filings for the fourth straight year.

However, three years after the U.S. housing bubble burst in 2007, the cumulative inventory of properties in the foreclosure process kept climbing in New York through last year, the report showed. The percentage delinquent by 90 days averaged less than 1 percent before the housing crisis. Those in the foreclosure process continued to rise, to 5.2 percent, in the fourth quarter of 2010.

The report analyzed data from RealtyTrac and the Mortgage Bankers Association along with federal mortgage data.

The foreclosure crisis followed a large increase in subprime mortgages, which nearly doubled in New York from 2004 to 2006, when they accounted for almost 30 percent of total new loans. Many borrowers who stretched to make payments, expecting housing prices to keep rising, were caught short in the market downturn or personal setbacks like pay cuts or job losses. The subprime share fell to less than 5 percent of new mortgages in 2009 as lending standards were tightened.

Subprime mortgages represented more than 40 percent of all new mortgages in 2006 in nine of the 10 New York City neighborhoods with the highest foreclosure filing rates based on homeownership.

In 2010, the foreclosure filing rate fell nearly 25 percent in New York City, and by 45 percent in the borough of Queens, which had half the neighborhoods with the highest rates a year earlier. Jamaica was highest, with a total of 2,394 and a rate of 29.9 per 1,000 households in 2009, declining to 1,262 or 15.6 per 1,000 last year.

The report shows foreclosure filings rising in Long Island’s Suffolk County from 7,650 to 8,123. In suburban Putnam County, they rose from 560 to 578, and in Westchester dropped from 3,257 to 2,738.

Upstate, Albany County filings fell from 629 in 2009 to 404 last year, rose in Onondaga County from 499 to 540 and declined in Erie County from 2,859 to 965.