Home > About BNE > Press Room > 2009 Archive > August > Buffalo Niagara bucks some bad trends

Buffalo Niagara bucks some bad trends

Bankruptcy filings growing more slowly here, while foreclosures have been declining

By Jonathan D. Epstein
NEWS BUSINESS REPORTER

 Western New York continues to buck the national trends of escalating personal bankruptcies and balloning foreclosures.

According to figures from the Erie County Clerk’s Office, foreclosure filings are down by double-digit rates both from a year ago and five years ago, while the national rate rose 32 percent.

That’s “good news for Western New Yorkers,” said Erie County Clerk Kathleen

C. Hochul.

And according to the U. S. Bankruptcy Court for the Western District of New York, bankruptcy filings in Buffalo are up 7.4 percent from a year ago. Nationally, they’re up 35 percent.

“To the extent that bankruptcy is a reflection of economic hardship, the Buffalo area is not experiencing the same type of results that are being experienced generally across the country,” said Carl L. Bucki, chief judge for the bankruptcy court here.

“It may be that we did not experience as much of a real estate bubble as the rest of the country. It may be that our economy is not doing as badly as the rest of the country. Or it may be some other factor,” he said.

The newest figures on both bankruptcies and foreclosures provide more evidence of how the “slow and steady” Buffalo Niagara economy has proved its strength during the current national recession.

Nationwide, the Administrative Office of the U. S. Courts reported 1.3 million bankruptcy filings for the 12-month period ended June 30, 2009. That’s up 35 percent from the same 12-month period a year ago, when cases totaled 967,831. And filings were higher in all four primary chapters of the bankruptcy code: 7, 11, 12 and 13.

Some areas “really have seen massive increases,” Bucki said. However, in the Western District of New York, “we’re much, much lower than the numbers nationally. They’re up a little bit, but they’re not keeping pace with the rest of the country.”

For the same 12-month periods, local cases rose 7.4 percent, from 5,372 to 5,772. And from June to July of this year, filings actually dropped 5.2 percent, to 543, although they were up 6.3 percent from July 2008.

Bucki said the bankruptcy reform law that took effect in October 2005 has clearly had an impact. “There’s no question that the number of filings declined after the effective date,” he said. “And they never have returned in this district to the levels that existed before.”

And he said that, at least anecdotally, consumers are benefiting from the mandatory credit counseling that is now required. Many are coming in to court to reaffirm past debts they still want to repay, and they have explained how the counseling process has helped them. But “how broad that is, I don’t have any statistics.”

Meanwhile, RealtyTrac, the Irvine, Calif.-based research firm that tracks foreclosure filings in counties across the country, reported that foreclosure filings on U. S. properties in July rose to 360,149. That includes default notices, scheduled auctions and bank reposses-

sions.

That’s up 7 percent from June and 32 percent more than a year ago. And it’s the third time in the last five months where the firm has reported a new record set for foreclosure activity. About one in every 355 housing units received a filing in July.

Nevada posted the highest state rate for the 31st straight month, at more than six times the national average. California was second, followed by Arizona and Florida. Indeed, those four states represented more than half of total foreclosure activity, according to RealtyTrac.

New York had 5,954 filings in July, or one for every 1,334 housing units. That’s up 23 percent from June, but down 3 percent from a year ago. That included 4,613 lis pendens filings, which are the first notice a homeowner receives.

But in Western New York, filings of lis pendens for the first seven months of the year fell 17 percent from a year ago and 19.7 percent from 2005, to 1,513. And foreclosures fell 22 percent from a year ago and 32.3 percent from 2005, to 850.

The lower foreclosure figures locally reflects Western New York’s more affordable and rational housing market, where most buyers have been able to finance home purchases with conventional mortgages, without having had to stretch or opt for the riskier and more complex loans that wreaked havoc in other parts of the country, said Gary D. Keith, M&T Bank Corp.’s chief economist.

The slow and steady price appreciation also discouraged “flipping” and speculating, he added. And many lenders skipped Western New York for faster-growing markets, so competition and pricing here were more stable.

jepstein@buffnews.com