The suffocating embrace of the subprime crisis is definitely starting to take the wind out of the city’s residential deals. Mortgage brokers say they’re seeing a pronounced uptick in the number of buyers who are backing out of deals because they can’t get mortgages at competitive interest rates. Hardest hit are borrowers who don’t have excellent credit histories, or who expected to take out large mortgages and then pay them down with bonuses. A number of brokers say they’re seeing plenty of prospective buyers who didn’t lock in rates and who can’t close on the units because they can’t afford higher-than-expected monthly payments. And these are borrowers who aren’t necessarily on financially shaky ground—a sobering article in today’s Times documents some of the effects of too-lenient lending practices geared towards lower-income earners. Large swaths of working-class enclaves in the boroughs, like parts of central Brooklyn, have turned into new-development ghost towns because of predatory lending practices and concomitant rising foreclosure rates. So it’s becoming clear that the mortgage industry crisis is now affecting the city’s haves and have-nots. Anyone had a deal scuttled recently?
Frustrated New Yorkers Grapple With Loan Rates [NY Times]
Risky Loans Help Build Ghost Town of New Homes [NY Times]
Photo by D.B. Blas