Buffalo is no Phoenix, the backdrop for President Obama's bailout of the housing industry Wednesday, but it stands to benefit just as much as the boom-and-bust Sun Belt city.
Obama's plan is destined to help Buffalo because it targets homeowners, not speculators or flippers, and because it helps less-affluent people who no longer can afford their mortgage payments.
It's a strategy, experts say, that above all else will help keep more local families in their homes.
"It's always better to avoid foreclosure," said Michael Clarke, program director of the Buffalo office of the Local Initiatives Support Corp., a not-for-profit group that helps revitalize neighborhoods. "It's never good for the lender, borrower or the community to let these homes go empty."
At the heart of Obama's housing bailout is the $75 billion Homeowner Stability Initiative, a program designed to help homeowners who no longer can afford their mortgage and, without help, may lose their home.
Experts say the key word there is "homeowners," not speculators.
"This is specifically intended to help people who are in homes and want to stay there," said Kathleen Lynch of the Western New York Law Center, a group active in counseling foreclosure victims.
To hear Lynch talk, many of these people are low-income wage earners who fell behind in their monthly payments and are now at risk of losing their homes.
Some of them are people who lost their jobs or became seriously ill. Some are people who bought homes they never could afford.
Their one common trait? Without help from the government, they will probably lose their homes.
"The plan seems to target foreclosures in a sensible way," Lynch said. "It aims to assist homeowners facing foreclosure while also contemplating the impact on neighborhoods and taxpayers."
Lynch said the emphasis on homeowners, not speculators or flippers, will help stabilize homeownership here and in turn help strengthen Buffalo's neighborhoods.
She also likes Obama's reliance on cash incentives so lenders will work with at-risk borrowers to modify their loans before they reach the foreclosure stage.
The incentives will encourage a lender to cut a homeowner's monthly mortgage payment to a sustainable level. That level is defined as no more than 31 percent of the homeowner's income.
By providing a cash incentive, government is essentially absorbing some of the lender's losses.
"My clients want to stay in their homes," said Carol Brent, a staff attorney at Legal Services for the Elderly, Disabled or Disadvantaged of Western New York. "We have a very different foreclosure problem here, and I think the president's program will help."
Aaron Bartley of PUSH Buffalo, a West Side group active in housing issues, says Obama's strategy is "a long time in coming" and represents sure progress.
The problem, in Bartley's eyes, is that the strategy doesn't go far enough in dealing with Buffalo's more serious housing crisis.
"We know there are thousands of houses that already are foreclosed and vacant," he said. "Obviously, that part of our crisis is not going to be addressed."
The other question is whether the incentives Obama plans to offer lenders will be offered to private lenders not currently regulated by the federal government.
And even if they are, Bartley and Clarke wonder if the incentives are enough to get the region's predatory lenders on board with the idea that local mortgages need to be modified and reduced.
A recent study by the Western New York Law Center found 44 percent of the mortgages made here from 2001 through 2006 involved lenders who do not face the same level of federal regulation as banks and other mortgage lenders.
And the people taking out those loans are not just low-income, inner-city families. They also include middle-class homeowners in Amherst, Hamburg, Evans and every other suburban community.
"We have a lot of unregulated lending going on, and that will continue to be a problem," said Clarke.
The Obama plan has a second component that also could prove useful to local homeowners in trouble.
Right now, a large number of local homeowners who receive their mortgages through Fannie Mae or Freddie Mac cannot refinance their mortgages at lower rates.
Under Obama's plan, those restrictions would be limited.