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 the Neighborhood Economic Development Advocacy Project'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 preforeclosure 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.

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.