New Manhattan condos see rise in foreclosures

I LOVE this except!:

"Others are not so lucky, like a creative professional who said he'd probably lose his apartment at be@Clinton West, where seven of 147 apartments had pre-foreclosure filings.

Records show he purchased his studio apartment in 2007 for $507,000 -- 25 percent more than the previous owner paid three months earlier -- with almost zero equity by taking out two mortgages.

"My one loan is about 8 percent interest only and the other is 13 percent interest only," said the owner, who agreed to discuss his predicament if he could remain anonymous. "I was told by an associate at [lender] SunTrust at the time that this is probably the only way I could get a mortgage and that I could refinance a little down the road with equity."

"I knew going in that it was a ridiculously high interest," he said. "But I thought I would live tight for a year or so and then refinance based on the equity, which at the time seemed like a great plan. I'm not saying I was coerced, but I was excited to buy my first place and I wanted to believe I could make it work."

Unfortunately, his business declined along with the economy, leaving him with no money to put toward equity. He said the bank has refused to modify the terms of his loan.

Sh*t, meet fan! HAHAHAHAHAHHAHAHAHAHAH (oh yeah, Manhattan is DIFFERENT!) LOL!

exerpt that is

The fact there are NO foreclosure in Manhattan and RENT ARE RISING... can mean only one thing,
"oops, i did it again, I played with your heart" Brittany Spears is planning a comeback!

yup, and Blue Horseshoe LOVES Blue Star

how serious is this, this seems serious if its wide spread, which this article suggests.
anyone know what these rates are in other places..

it's certainly not being advertised. but I think it's incredibly naive to think that the horrendous underwriting that occurred elsewhere from 2003 to 2008 didn't occur here (condos). due to the snail's pace of new development here it will show up in later loans so may be somewhat minimized, but by the same token will show up later, so much is yet to come.

Thank you Jason for posting the link. Very informative article.

Felt really good seeing this term used in the article: "Investor-driven foreclosures"
-some people believe there were no such thing as "investors" driving prices up in Manhattan either.

It's amazing to me that more people don't end up homeless on the street, they are making such ridiculous financial decisions.

The examples in this story are just appalling.

All I can say is, to hell with those banks that are taking the losses on mortgage mods. If those banks fail, I"ll be damned if my tax dollars are going to bail them out because they took losses from ninnies buying overpriced Manhattan real estate who clearly don't enough to come in out of the rain.

I mean there should be consequences for the kind of stupidity it takes to lend to idiots like that, and the consequences should be that they fail and go under and get zero of my tax dollars to bail them out!!!!

"It's amazing to me that more people don't end up homeless on the street, they are making such ridiculous financial decisions."

It's really a testament to the width of our society's safety nets. On the balance, probably a good thing: people have been making stupid financial decisions since the dawn of mankind probably.

"I mean there should be consequences for the kind of stupidity it takes to lend to idiots like that, and the consequences should be that they fail and go under and get zero of my tax dollars to bail them out!!!!"

Great idea, I wonder why neither Bush nor Obama thought of that.

Oh, by the way, your savings account at Citi got wiped to zero since you're an unsecured creditor to a bankrupt entity. Unfortunately, you were the idiot that lent the money to the idiot bank who in turn lent the money to the idiot homebuyer. You probably didn't even realize that it was your money being lent out. Well, unfortunately, the FDIC can't step in to make you whole because that would require the taxpayer to bail the FDIC out so that it could bail you out of your poor decision to lend the money to the idiot bank.

Before regurgitating populist angst, take some time to understand the nature of the problem. The purpose of a bank is to write checks they can't really cash (lend 30-year money out with overnight deposits). The purpose of regulation is to make sure this is being done in a beneficial way to society. By guaranteeing depositors' money, the government has taken away your need to question the lending practices of your bank. That questioning has been replace with regulation, which obviously failed. Your proposed solution (let the banks fail and don't give taxpayer support) punishes the very depositors the government was seeking to protect.

Why should the depositors be punished for the government's failings?

This article was to be expected. The buildings listed are all and have high percentages of investor properties. Investor properties purchased pre-construction were meant to be flipped. Underwater investor properties on brand new construction are probably the most prone segment to go into foreclosure, and not very correlated to the financial shape of the party walking. I don't see this representative of the Manhattan R.E. market and furthermore we don't have the same investor property phenomenon as say Miami, Vegas or San Diego. If the numbers below occurred in San Diego or Vegas the pundits would declare the real estate crisis over.

1. Atelier at 635 West 42nd Street in Clinton by the Moinian Group: 21 units, or 4 percent of 478 units, had foreclosure filings. The building was finished in 2007.

2. 200 Chambers Street in Tribeca by Jack Resnick & Sons: 19 units, or 7 percent of 258 units, had foreclosure filings. The building was finished in 2007.

3. Downtown Club at 20 West Street in the Financial District, by the Moinian Group: 12 units, or 4 percent of 283 units, had foreclosure filings. The building was converted into a condominium in 2005.

4. Worldwide Plaza at 350 West 50th Street in Clinton, built by William Zeckendorf Jr.: 11 units, or 2 percent of 455 units, had foreclosure filings. The building was finished in 1989.

5. 1600 Broadway on the Square in Times Square, by Sherwood Equities: 10 units, or 7 percent of 139 units, had foreclosure filings. The building was finished in 2006.

6. (tie) Millennium Tower Residences at 30 West Street in Battery Park City, by Millennium Partners: 9 units, or 4 percent of 236 units, had foreclosure filings. The building was finished in 2006.

6. (tie) 130 Barrow Street in Greenwich Village, by Sherwood Equities: 9 units, or 9 percent of 95 units, had foreclosure filings. The building was converted into a condominium in 1982.

The investors defaulting on their condos are exercising a heads I win tails you lose mentality. Strategic default pure and simple.

Riversider: "If the numbers below occurred in San Diego or Vegas the pundits would declare the real estate crisis over."

New Yorkers like me would declare it's just the beginning.

And before everyone jumps to conclusions, don't just gloss over these items:

"Sometimes an owner will not pay the mortgage for several months as a strategy to encourage the bank to modify the terms of their loan, by "proving" the loan can't be paid under the original terms, but could be under better terms."

"The filings were all lis pendens or "pre-foreclosures," the earliest stage of the process."

"Since there's no public filing indicating that an owner satisfied the outstanding balance with the bank, some of these foreclosures may have been worked out."

I agree w/ Riversider - this is not representative of the NY re market as a whole

1 - we are talking about new dev condos ONLY
2 - this is talking about lis pendens/pre-foreclosure which
3 - as waverly pointed out, could have been/will be resolved

Just my 2 cents.

Re: this is not representative of the NY re market as a whole

Wrong:

4. Worldwide Plaza at 350 West 50th Street in Clinton, built by William Zeckendorf Jr.: 11 units, or 2 percent of 455 units, had foreclosure filings. The building was finished in 1989.

My hunch is that this will become VERY representative of the ENTIRE CONDO market in NYC real soon. Now does the "NY condo market" by definition equal "new dev condos"? I dont have that data (what percentage of NYC condos are "new"?). Anyone?

West you are certainly right, that is not "new" as I think ppl generally think of the recent condo boom of the 2000s. I def dont equate new condo market with NY condo market, but that still does not mean the above data is representative of the NY re market as a whole (even your post indicates you think its just representative of condos). I forget what exact % of NY is made up of coops, but I know its pretty substantial and I think we can all GENERALLY agree that coops do a pretty good job of weeding out weak buyers at the get-go.

There at least seems to be a shift in the debate here from "no foreclosures" to "these particular foreclosures not being representative".

RS: Whether they are strategic or not, they certainly aren't positive indicators for the RE market

Techno: Coops might do a good job, but the problem here is that prices in markets are set at the margin. These foreclosures may (emphasize MAY) eventually cause problems for pricing for other sellers.

Oh come on inonada, are you honestly equating my decision to deposit money into an FDIC-insured back with the decision of the Hell's Kitchen buyer in that story to purchase a studio at the top of the market for a monthly carry that is double what the place would fetch in rent?

Really? You really think my decision to put money into a bank account at Citi is the same level of risk-taking as his decision to put his money into that kind of investment?

Tell me more of these fairy-world equivalencies, I want to know more of this land where a penthouse is the same thing as a pot-to-piss-in.

Alright, I admit I was being a bit tongue-in-cheek.

My point was that if the government let the banks fail and wanted to make good on its FDIC promises, then the taxpayer would still be on the hook, except for a much larger amount. As it stands now, the taxpayer lent Citi $45B at a time no one else would. More importantly, the taxpayer made it more or less clear that it would not allow Citi to fail. In exchange, the taxpayer has extracted a pound of flesh in the form of preferred and common shares. Since then, Citi has repaid about half its bailout money from money raised from the market. Prior owners of Citi have lost 90% of their money.

You alternative of letting Citi fail would have triggered an FDIC guarantee of $900B. This is money that the FDIC needs to pay out immediately, and then it would hope to recover some portion of it in bankruptcy a few years down the line. Because Citi would no longer have been an ongoing concern, it would have only collected maybe $600B, leaving the taxpayer with a $300B hole. Of course, the FDIC did not have $900B to hand out, so the taxpayer would have needed to step up. The alternative would have been to explain to GraffitiGrammarian that his FDIC-insured deposits were actually at risk.

All I'm saying is that when you say:

"If those banks fail, I"ll be damned if my tax dollars are going to bail them out"

Have an understanding of who exactly got bailed out. It wasn't the banks' shareholders, it was their creditors, which to a large extent was comprised of FDIC-insured deposits.

inonada...ummmm...CREDIT DEFAULT SWAPS GOLDMAN SACHS BLAH ARGHGHGHGHGH!!!!!!!

Reminds me of the Titanic.... "tip of iceberg" anyone?

"inonada...ummmm...CREDIT DEFAULT SWAPS GOLDMAN SACHS BLAH ARGHGHGHGHGH!!!!!!!"

Well, that was such a coherent argument that I don't think I'll be able to counter. You win, i no nada.

w67thstreet was that a reference to your "thing" for Leonardo DiCaprio?

just to point out: when the short sale phenomenon is like two orders of magnitude higher than it ever was before (and I may be way UNDER estimating here), you have to realize the impact it has on foreclosures. It's like the shadow inventory debate: unless you add short sales to foreclosures, your historical perspective evaporates.

I remember when there was like a foreclosure sale a week in both Worldwide Plaza and Executive Plaza (the old Taft Hotel 150 W 51st) and sometimes 3 -6 in a week.

don't tell alpo!