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Boro pre-foreclosures approach record high

As foreclosures in Queens decline to their lowest level in two years, the number of pre-foreclosures filed against boro homeowners continue to approach a two-year high, according to a recent report. AP Photo/Jae C. Hong
TimesLedger Newspapers

The number of newly foreclosed homes in Queens fell to its lowest point in two years during the third quarter of 2012, according to a recent report, but experts warn the new figures do not indicate a light at the end of the tunnel for struggling borough homeowners.

During the three-month period from July through September, 77 new foreclosure auctions were scheduled in Queens, representing the sharpest decline (-27 percent) from the second quarter throughout the five boroughs, according to a report by the real estate website propertyshark.com.

The report revealed that Queens was the only borough to register a decline (-6 percent) in foreclosures from a year earlier.

Fewer foreclosures, however, seem to indicate more about the banks’ practices than they do about the number of homeowners who are delinquent on their mortgages, according to a real estate expert.

“Although the number of first-time scheduled foreclosure auctions hasn’t gone up, it doesn’t mean that the tension is gone,” wrote Andrew McElhone, an industry principal for propertyshark.com, who added that tighter restrictions on foreclosure procedures had artificially lowered the number of auctions. “On the other hand, pre-foreclosure filings continue their steady quarter-by-quarter increase, adding to the foreclosure backlog in New York courts.”

A lender files a foreclsoure lis pendens with the court when a delinquent borrower is notified of a pending lawusit. The number of those filings began a dramatic decline — as did foreclosures — at the end of 2010 when lenders were required to affirm they had all their paperwork in order when initiating a lawsuit. However, lis pendens filings have been climbing steadily since the end of 2011 to approach 2010 levels.

This trend continues at a time when the rate of delinquent mortgages has been declining across the country, according to Diane Coogan, an economics professor at Queens College.

Coogan explained that the national rate has been falling as the market sorts through the bad mortgages.

“Basically, it’s just the pattern of what happened. Any new mortgages created in the past three years have been to highly qualified borrowers,” she said.

“Lending standards went way up, and as a consequence people who got new mortgages have proven themselves less likely to become delinquent,” she added. “Older borrowers have already revealed themselves to be not terribly credit-worthy.”

As to why the banks have been increasingly filing lis pendens notices against borrowers whose older mortgages continue to fall into delinquency, Coogan said it was anyone’s guess.

Reach reporter Rich Bockmann by e-mail at rbockmann@cnglocal.com or by phone at 718-260-4574.

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