By Denise Richardson
Foreclosures in the Oneonta area could rise as the housing crisis worsens, according to a report released Wednesday by Sen. Charles Schumer, D-N.Y.
Upstate New York, including three area counties, is below the national average but Schumer said it is not immune from the continuing trend. Schumer said he is ``fighting tooth and nail'' for passage of a Senate bill that would provide New York with more than $630 million for programs such as counseling services to avert foreclosures and funding for communities striving to resurrect housing markets.
While the aid would be helpful, the federal government should have recognized a crisis was looming, two local sources said, and there are concerns about measures that take a reactive or ``bailout'' approach.
But Schumer said the bill was emergency legislation not intended as a ``bailout.'' He said the proposal introduced by Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., includes improvements to the nation's housing system and would help contain the housing crisis and prevent another crisis of its magnitude.
Schumer is doing what New Yorkers would expect of him _ trying to ensure that New York benefits in reasonable proportion from the bill, said Wade Thomas, economics professor and associate dean at the State University College at Oneonta. While the assistance could be ``comforting policy,'' the government should be cautious about any message it sends about poor decision-making, he said.
The proposed bill is being debated on the Senate floor this week, Schumer said, and the House of Representatives has passed a companion bill. The president hasn't commented negatively about the measures, he said, and if enacted, the money would become available within 30 days.
New York ranks 32nd among states with the highest foreclosure rates, with 0.62 percent of households having had a foreclosure action filed against them in the last 12 months, Schumer said. In Nevada, the worst-hit state, one in 20 households has had at least one foreclosure filing.
Earlier this year, court clerks said foreclosure filings were up in Otsego County and high in Delaware County.
Schumer's report said that in Delaware, Otsego and Chenango counties, the percentage of household with at least one foreclosure filing in the past year ranged between 0.05 percent and .10 percent. The total for the Southern Tier, which in Schumer's report includes those three counties, is 0.16 percent.
Nationally, 1.47 percent of households have faced at least one foreclosure action in the past year, Schumer said.
Upstate New York has avoided some foreclosure troubles because housing prices have remained stable or appreciated and sales of existing homes have increased, Schumer said. However, experts expect foreclosure rates to climb unless preventative measures are taken, he said.
The proposed Senate bill contains more than $650 million for New York state under three provisions, including about:
$7 million for housing counseling organizations that assist troubled borrowers;
$120 million in Community Development Block Grant funding to help communities struggling with indirect costs of foreclosures;
$630 million in tax-exempt bond authority for state housing finance agencies to refinance homeowners trapped in unaffordable loans.
The foreclosure process and trying to remedy situations is time-consuming, said Patrick O'Rourke, housing counselor with Quaranta Housing Services, a division of Opportunities for Chenango. In recent months, his caseload for foreclosures has increased from about five by three, he said, and his supervisor has begun helping.
``More counselors definitely are needed,'' O'Rourke said Tuesday. He expressed concerns about whether the bonding authority would help homeowners who paid their mortgages instead of their credit card bills, avoiding foreclosure but not a poor credit rating.
O'Rourke said credit counselors in Binghamton help with foreclosure issues, but he didn't know why counselors aren't available in Otsego or Delaware counties.
Thomas gave a mixed review of the Senate proposal.
"At a juncture where the citizenry is already nervous about energy and food prices now and into the future, a legislative overture that promises to slow the pace of foreclosures will probably be received as comforting policy,'' Thomas said.
However, funding for foreclosure counseling is a reactive approach to the crisis, Thomas said. Some situations could be prevented through better upfront knowledge of personal finance and how loan terms could increase a borrower's risk of foreclosure. And the government has to be careful about the potential moral hazard propagated by acting as a backstop for bad decisions, he said.
``If people assume they can depend upon government to hold them harmless from poor decisions about borrowing or lending, incentives to act responsibly are diminished,'' Thomas said. ``The scope of assistance ideally should be rather narrow, but there will be some tough judgment calls about who qualifies for refinancing and who doesn't.''
Schumer said his efforts to curb the housing crisis include help in January to secure $180 million in federal aid for nonprofits that perform foreclosure prevention counseling. He also led support to provide assistance matching the original $180 million, which is included in this Senate legislation.
