By MICHAEL DEMASI
The Albany Business Review

Upstate New York is faring better than the rest of the state and nation in terms of subprime home mortgages in foreclosure, according to a new report.

Of the 30,000 Upstate subprime mortgages at the end of December, about 2,000 were in foreclosure, according to a study by the Federal Reserve Bank of New York.

The foreclosure rate of subprime loans, 7 percent, is less than New York as a whole, 14 percent, and the nation, 12 percent.

Subprime mortgages refer to loans given to borrowers with bad credit or in which borrowers didn't have to provide lenders much proof of their income and assets.

The nation's economy began spiraling downward when interest rates rose in the mid 2000s and many subprime borrowers with adjustable rates fell behind on mortgage payments.

That sparked a dramatic increase in foreclosures in parts of the country where the real estate market had overheated during the boom years of the early 2000s, such as California, Nevada and Florida.

While the foreclosure crisis has not been as severe in Upstate New York, it has impacted urban areas more than rural or suburban ones, according to the Federal Reserve study.

Six counties with large cities - Albany, Schenectady, Rensselaer, Erie, Monroe and Onondaga - have half of all Upstate subprime mortgages in foreclosure. Forty-two counties account for the other 50 percent.

The highest concentrations, 13 percent, are in Erie and Monroe counties, where Buffalo and Rochester are located.

Albany and Schenectady counties have 6 percent of the total, and Rensselaer County has 5 percent, according to the report.

Each of the local counties has 100 to 199 subprime mortgages in foreclosure.

Since all six of the Upstate counties have urban areas with high housing densities, there isn't much difference in the foreclosure rates when the problem is measured per 1,000 units of housing.

For instance, the ratio in Monroe County is 0.9 per 1,000; in Albany County, it's 1 per 1,000.

The study found that the value of properties Upstate in foreclosure was "considerably lower" than those in the rest of the state and the nation.

The average appraised value of a home in foreclosure Upstate was $134,000; in New York state it was $443,000; in the nation, $280,000.

The study also found more rigorous underwriting requirements for subprime mortgages Upstate. While only 30 percent of the Upstate loans in foreclosure had little or no documentation, 64 percent of loans in New York and 44 percent of loans nationally had little or no documentation.

Statewide, reports RealtyTrac, home foreclosures in New York fell 23 percent in the first quarter compared to the same period a year ago, but increased 32 percent compared to the fourth quarter of last year. RealtyTrac is a California company that markets distressed properties.