Home foreclosures in New York will surge in the coming months if the owners of more than 700 Manhattan condo units hit with lis pendens filings in 2009 are not able to save these properties from foreclosure, based on data from a New York City-based real estate firm.
According to the firm, the number of Manhattan condo units hit with foreclosure filings rose to 725 units in 2009, up by a staggering 125.2 percent from only 322 filings in 2008.
According to analysts, a number of these condo owners have intentionally allowed their mortgage loans to go into pre-foreclosure so that they can work out lower monthly payments with their lenders. Interviews with some of them indicated that they were largely successful in using pre-foreclosure as a tactic. In fact, under the federal loan modification program, homeowners can only apply for loan modification after they have defaulted for a number of months.
A large number of distressed Manhattan condo owners are investors whose rental or resale projections did not pan out. When the funds they reserved for paying the initial mortgage and condo fee and tax payments while they wait for buyers or renters were wiped out because they have been waiting for too long, they no longer have an option other than to let their investments get added to lists of home foreclosures in New York.
The task of looking for renters or buyers for these condo properties has been difficult because of several factors: the costly monthly charges, difficulty in finding financing for units in foreclosure-hit buildings, higher mortgage rates for investment properties and the wide gap between projected monthly rental income and carrying costs.
Even buyers who have been spending time researching almost every list of foreclosure homes, and therefore are likely to consider these distressed condos, are not interested because the cash flow projections are not good. For instance, one condo unit that can be rented out for $3,000 has monthly common charges amounting to $5,750.
New York home foreclosures have been concentrated over the past years in Jamaica neighborhoods in Queens. Now, the claws of foreclosure have spread out into the affordable-housing complexes of Brooklyn and the Bronx and into the higher-priced condos of Manhattan.
Among the condo buildings with units likely to enter lists of home foreclosures in New York in the coming months are the Atelier, 200 Chambers Street, Downtown Club, World Plaza, 1600 Broadway, Millennium Tower Residences and Cipriani Club Residences.