condo crisis hits wall st. high rollers

Dozens of financial-industry professionals may lose their new Battery Park City condos because the building's developer allegedly defaulted on debt payments, which forced the property into foreclosure and threatens an immediate shut-off of heat and electricity. It's a bitter irony for the residents of 225 Rector St. - many of whom made fortunes on Wall Street - that the nationwide bank-fueled... [more]

Dozens of financial-industry professionals may lose their new Battery Park City condos because the building's developer allegedly defaulted on debt payments, which forced the property into foreclosure and threatens an immediate shut-off of heat and electricity. It's a bitter irony for the residents of 225 Rector St. - many of whom made fortunes on Wall Street - that the nationwide bank-fueled foreclosure crisis has come full circle to hit them in their own homes. "For the moment, our main issue is to ensure that we have heat," says Maria Rapetskaya, who bought a studio in August. The common fund to pay for doormen, heat and electricity is nearly broke and all services could be cut off by the end of the week, Rapetskaya said. Developer Yair Levy purchased the 306-unit building for $165 million in 2006 with financing in the form of a commercial mortgage-backed security from Lehman Brothers, according to real-estate magazine The Real Deal. Similar securities are blamed for the current foreclosure crisis. New buyers, who paid more than $1 million for a one-bedroom, started moving in last summer as construction on the building's common areas continued. But suddenly in mid-December, all work stopped and the sales office closed. "People spent millions to live in a first-class building, and they're living in a permanent construction zone," says Marc Held, an attorney for Lazarowitz & Manganillo, who represents the buyers. Now Anglo Irish Bank, a creditor, has sued Levy, according to The Real Deal, alleging he owes $117 million. It's unclear what will happen to the residents of the 70 sold units if the foreclosure proceeds. Calls to Levy, who allegedly assaulted a business partner with an ice bucket last year, were not returned. A spokesman for Michael Shvo, who has been marketing the building, said, "To the best of our knowledge, [Levy] does owe us money." [less]