ALBANY - New York foreclosure filings fell 10 percent during the third quarter, reversing a yearlong trend, according to new figures.
State officials and data trackers attribute the improvement in part to a new lending reform law giving New Yorkers an extra 90 days to work to save their homes. But they warn that the drop in foreclosures could be just a temporary reprieve.
That's because other states showed a drop in foreclosures soon after they implemented similar laws that were followed by sharp increases when the initial grace periods expired.
"Unfortunately in many of these cases what you're seeing is just delaying the inevitable," said Rick Sharga, senior vice president of marketing at foreclosure listing service RealtyTrac Inc., which compiled the figures released Thursday by the state Banking Department.
Even though it was only in effect for one month, state officials say the new law likely had a lot to do with the decline in foreclosures. There were 14,477 foreclosure filings in the third quarter that ended Sept. 30, compared with 16,025 in the prior quarter.
State Banking Superintendent Richard Neiman said many lenders likely pulled back on their foreclosures before the law took effect. But he was cautious about reading much into the latest data.
"Let's wait to see how the data comes out for the next quarter," he said.
Foreclosure figures for the quarter ending in December will be more telling because they will capture foreclosures filed after the 90-day waiting period established by the new law.
Other states that have adopted similar laws saw sharp increases immediately after the initial waiting periods were through. For example, the foreclosure rate in Massachusetts leveled off last summer after that state adopted a 90-day waiting period. It spiked 465 percent after the initial period expired, Sharga said.
"The likelihood is the majority of people are still going to wind up in foreclosure," he said.
Earlier this month, RealtyTrac reported that national foreclosure filings in September were down 12 percent from August, with much of the decline attributable to waiting-period laws. In California, for example, lenders are now required to contact borrowers at least 30 days before filing a default notice. A similar law in North Carolina gives borrowers an extra 45 days.
But it's unclear how effective they'll be in stemming the tide of foreclosures. Most states, including New York, lack regulations requiring the lenders to restructure the loans, Sharga said.
"They're missing the mechanism to really solve the problem," he said.
