New Study Shows Sharp Decline in NYC Foreclosure Filings (For Now)

A joint study released on December 16th by RealityTrac and Trulia, foreclosure-tracking firms, reported a huge drop in foreclosures across New York City. The findings offer some good news for homeowners in Bedford-Stuyvesant, a neighborhood with the one of the highest subprime foreclosures in the nation, according to Federal Reserve Bank of New York data.

Beginning in 2008, at the height of the national foreclosure crisis, one in four homeowners with subprime mortgages in the 11233 zip code, which spans Brooklyn's Bedford-Stuyvesant and Crown Heights neighborhoods, lost their homes, the Fed said. At that time, Bed-Stuy had a foreclosure rate of 6.89 percent, almost four times the national subprime rate. And although the figure has slowly dropped, it remains still one of the highest in country.

But the newest RealityTrac data for November year-to-date figures shows New York City overall is faring better than most major cities across the country, with mortgage default notices, bank repossessions and scheduled auctions down across all five boroughs. However, even with lower figures, Brooklyn still showed the most, with 346 filings total.

Stephen Dookeeram, foreclosure counselor for Pratt Area Community Council's Home Services – a community-based housing services program for Bed-Stuy area residents – said the statistics don't sound accurate. Dookeeram says he has seen the same, steady stream of clients for the past two years.

"The statistics aren't accurate in my opinion," said Dookeeram. "We're constantly busy, and our volume of business has held steady. We've been seeing the same number of clients – a little more than 20 each month."

Dookeeram says that, if anything, the lower numbers are reflecting that banks are overwhelmed and taking longer to file paperwork with the courts. For example, before, Dookeeram said he was seeing clients with claims after only four to six months of non-payment. Today, many are not receiving foreclosure notices until after they've fallen behind nine to 12 months.

The Trulia study seems to contradict itself by announcing a dramatic slowdown in the numbers of filings across NYC, while in the same breath, showing Bed-Stuy leading the pack, as far as numbers.

In fact, according to Trulia Spokesman Ken Shuman, the drop in foreclosures filings are only temporary. He confirms what Dookeeram has observed, stating that rates are showing hibernation now due to a procedural slowdown around the robo-signing scandal, which revealed that many mortgage lenders were rushing to instigate foreclosure filings without proper review.

Furthermore, Trulia predicts that once the freeze is lifted in the first of quarter of 2011, foreclosure numbers likely will bounce back up, Shuman said.

"Current figures are a false sense of comfort," Shuman said. "We fully expect to see foreclosures kick back up in Q1, maybe even higher than before because of the backlog."

So where is Bed-Stuy in all of this "temporary" good news? They're in the same place they were before, still leading the nation in foreclosure filings per capita.

But according to Dookeeram, foreclosure filings aren't always the worst thing to happen to a homeowner.

"It's weird, but when a foreclosure happens, it can be a good thing," said Dookeeram with slight hesitance. "Referee Goldstein and Judge Douglas down there at City Hall are doing an excellent job in saving a lot of homeowners.

"As far as helping them through the settlement conference, get loan modifications and get approved for HEAP, they're doing a fantastic job in getting homeowners back on track."