In these metro areas, both modest incomes and stable real estate markets are improving the outlook for borrowers.

No American city fully sidestepped the housing foreclosure problem. But tell-tale boarded-up windows and lines of once-glittering condominiums standing empty are images largely absent from several metro areas. And many of these real estate markets are well-poised to recover. The cities coming back strongest from the foreclosure crisis are those that didn't see massive price inflation as the housing bubble swelled (the national peak was the second quarter of 2006, but different areas peaked at slightly different times), as well as blue-collar towns with modest economies. This is according to data provided to Forbes by Lender Processing Services, a mortgage-industry service provider. Texas cities with housing prices that never overheated, such as Austin and San Antonio, as well as former manufacturing centers including Buffalo, N.Y. and Harrisburg, Pa., join Midwestern cities like Wichita, Kan., and St. Louis, Mo., in showing signs that they're not as harmed by the foreclosures gripping the rest of the country. "The upper Northeast and Midwest cities didn't have much of a boom, so they didn't have much of a decline," says Michael Fratantoni, vice president of research at the Mortgage Bankers Association, the professional association for real estate financiers, based in Washington. "The Texas markets have also fared better than the rest of the country. The energy sector has been a source of jobs, even through this downturn. But a slowing rate of foreclosures in a particular city doesn't tell the entire story. Because of government pressure to limit foreclosures and modify delinquent loans, a new group of bad loans-those that are 90 days or more past due-are weighing down the market, and many of these borrowers have only temporarily stalled foreclosure. In 2009, of loans that were seriously delinquent (three or more months behind on payments), 200,000 more each month fell further behind on payments than entered foreclosure, according to LPS. "'Foreclosure crisis' is a misnomer. It's not a foreclosure crisis, it's a nonpayment crisis," says Ted Jadlos, senior managing director of the Applied Analytics group at LPS. "Foreclosures are just the symptom. It's truly about how many people are missing payments."
 
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