Report: Subprime Foreclosures Rampant in Brooklyn

foreclosure-rate-01-2008.jpg
On Friday the Federal Reserve Bank of New York released data listing how many subprime loans there were in New York state in October (broken down by zip code) and how many of those loans were in foreclosure. Bottom line? Bad news for Brooklyn, especially in the zip codes that include Crown Heights, Bedford-Stuyvesant, East New York, Williamsburg, and Bushwick. As reported in the Daily News, there were foreclosure proceedings under way for 25 percent of homeowners with subprime mortgages in 11233, which covers Bedford-Stuyvesant and Crown Heights. That subprime foreclosure rate is almost four times the national average of 6.89 percent. As the chart above shows, subprime foreclosure rates were also high in other Bed-Stuy/Crown Heights codes (11212, 11213, 11216, and 11238). The data also shows that 435 homes with subprime loans in East New York were in foreclosure. Foreclosure rates on properties in the zip codes covering Williamsburg and Bushwick, meanwhile, were also high (though the total number of subprime loans in those Zips was smaller than in Bed-Stuy, Crown Heights and East New York): 22 percent of homes with subprime loans in the 11221 Zip code were in foreclosure.
Brooklyn Neighborhoods Top Subprime Foreclosures in Nation [NY Daily News]
New York Fed Releases Zip Code Level Data on Nonprime Mortgages [NY Fed]

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  • Jimmy Legs

    maybe it’s of no consequence but those zip code/neighborhood pairings aren’t totally accurate. for instance a good portion of Bushwick is in 11207 (not just ENY), and a whole lot of 11221 is definitely Bed Stuy, not just Bushwick.

  • It’s bad news. No matter how you slice it.

  • I also just added up all of the Bed-Stuy foreclosures and got – 84.7 and then added up all of the downtown-heights-slope numbers and got 53.3. My point is that if you’re just going to look at numbers then of course the Bed-Stuy area is going to have higher numbers just on the vast area that it covers. So, we can almost argue that it’s on par with foreclosures as the areas of downtown-heights-slope

  • 11:00AM,

    Don’t ever compare Bed-Stuy to Park Slope. That’s Blasphemy. Bed-Stuy has the most forclosures because it’s not as good as Park Slope. The Downtown and PS foreclosures must be a mistake.

  • 11:07 you need to stop it. overall the outlook is not good!

  • BAD NEWS ALL AROUND, no matter what the zip code people.

  • funny they have 11238 as one of the zip codes. i lived in 11238 for years and it was always considered prospect heights. hmmm, interesting.

  • Do you even comprehend what 11am was saying, 11:07? Doesn’t seem you do. He was pointing out that zip code covers a larger area in Bed Stuy therefore there are MORE HOUSES therefore the numbers are similar if you are looking at foreclosures PER CAPITA. You know, like business people and bankers and people who aren’t housewifes sitting at home getting over defensive about their neighborhood they overpaid for.

    Park Slope is a great neighborhood. Yes. But the fact that it is a great neighborhood and a better neighborhood in some kind of general way than Bed Stuy does not make it inherently immune to foreclosures. In fact, I’d say we should expect to see more foreclosures in Park Slope coming along in the future, because a LOT of young families way overextended themselves to get into that neighborhood.

    As for the more slowly gentrifying neighborhoods like Bed Stuy and others, it might be that we see fewer foreclosures because there are a greater number of middle class people who have owned their houses 30+ years and owe less money on them. This mortgage crisis will affect every neighborhood in Brooklyn and the entire country. Don’t fool yourself it won’t.

  • Hey 11:20, have you ever heard of irony? 11:07 = tongue in cheek!

  • What is really interesting is the # of subprime loans – not necessarily the % in foreclosure. For example, zip code 11215 has 123 subprime mortgages – Even if all of them (100%) forclose, that is probably less than 1% of the total mortgages in that zip code.

  • Uh, I read 11:07 as someone’s joke to purposely incite a neighborhood war, duh.

  • 11238 also includes parts of Clinton Hill.

  • “…subprime foreclosure rates were also high in other Bed-Stuy/Crown Heights codes (11212, 11213, 11216, and 11238)…”

    11238? Wait a minute! These stats can’t include Clinton Hill, can they.

  • to 11:00 and 11:20 am: The first column is the NUMBER of subprimes and the second column of numbers is the PERCENTAGE of subprimes in foreclosure.

    The NUMBER of subprimes in Brooklyn Heights (11201) and Park Slope (11215 & 17) is 218, of which 22 are in foreclosure. These are not huge numbers relative to the total number of units sold in those neighborhoods (total housing stock is irrelevant): Furman Street and 110 Livingston alone account for several hundred sales.

    On the other hand, why are there any foreclosures at all (leaving aside the occasional investment banker so coked out that he can’t manage his life)? If the market is as strong as asking prices and the HOTD suggest, wouldn’t people having trouble with their loans be much better off selling instead of letting the house go into foreclosure?

    Finally, if you look at the full report, you will see that the trouble has not peaked. There are a large number of subprimes and Alt-A (“liar’s loans”) — perhaps a quarter in most neighborhoods — that will reset this year, presumably putting more “owners” into financial distress.

  • It is only bad news for the people who have to leave their homes. People who are looking to purchase will make these neighborhoods hot again. Most of these neighborhoods have seen their values increase 300%, so to lose 20% of its current value does not mean that people who decided to buy there before the burst made a tremendous mistake. I for one, will be looking heavily for an opportunity to purchase. Because when this blows over, and downtown brooklyn becomes a 24hr-7day hub people will be climbing over each other to get into Crown Heights and Bed-Stuy. Don’t let the haters fool you. FHA will now guarantee a loan up to $730,000, with 3% down for first-timers. Most of these brownstones are priced near this fiqure.

  • “…wouldn’t people having trouble with their loans be much better off selling instead of letting the house go into foreclosure?”

    Aren’t you familiar with the concept, “underwater”? If your mortgage(s) is greater than comps, it’s “bloop bloop bloop…”. You’d have to bring offset cash to the closing table or get foreclosed on.

  • “…people will be climbing over each other to get into Crown Heights and Bed-Stuy.”

    DA PLANE!!! DA PLANE!!!

    “FHA will now guarantee a loan up to $730,000, with 3% down for first-timers.”

    …til December. Then what?

  • Zip codes often span several neighborhoods. e.g. 11238 covers parts of Crown Heights, Bed-Stuy, Prospect Heights, Clinton Hill and Fort Greene. I used to live on Lafayette between Carlton and Adelphi smack in the middle of Forte Greene and its zip code was 11238. I live in Clinton Hill and its still 11238. Point being, zip code is not the best indicator of what area or neighborhood you’re referring to.

  • These do not seem like large numbers. The media makes it sound like there are thousand of foreclosures in every community but that is not the case. More like dozens. Hype, hype hype as usual.

  • 11:58…I purchased a five story house in Fort Greene back in 1997 during the last housing recession. Everyone, including my fiance at the time told me I was crazy. That I was chosing to raise a family around crackheads and welfare mothers. No need to tell you how this story ends, but this certainly has a familiar ring to it. I think I will be taking a few strolls to Crown Heights this spring…lol.

  • Hard to know what this data means without any frame of reference. Like say what were the comparable stats from last year or 5 years ago.

  • 11:58…only fannie mae and freddie mac are up until december. FHA is permanent. There is a real opportunity here, if people will stop seeing gray clouds all the time.

  • Play it smart and there can be opportunities. Our “fringe” neighborhood house increased in value 20% over the last year alone, between buying it under market, then adding value via our improvements and the general revival of the neighborhood which has continued steadily despite the slower market. If the market drops the house is still worth more than we purchased it for. Though we’d probably just barely get what what we put into it for renovations. What’s important is not going nuts overspending on renovations. And look for good deals. Don’t leap to make an offer if nobody has made an offer yet. Hang tight and just watch the situation. The seller might drop the price. The inventory for houses is dismal though, that’s what stinks about looking to buy right now.

  • Keep in mind that alot of the foreclosures reported are from people betting on the market. Bed Stuy and the other neighborhoods in questions had historically lower priced housing thus a low barrier to entry for those looking to make a quicker buck. Many were using sub-prime mortgages to hedge their risk. It shouldn’t be a determinant of the neighborhood.

  • There are about 55,000 people living in 11216. Out of 460 subprime loans, 15.7% are in foreclosure, or around 72 mortgages. One for every 764 people. I don’t know how many households that means, and I don’t know if that’s more than normal, but it doesn’t seem like a lot. Maybe it’s enough to push the market from insane prices to kind-of-insane prices. I don’t know.

  • the media is destroying the world.

  • 12:28, you can’t compare the number of foreclosures with the total number of people. You have to compare it to the number of buildings. If the owner of a 4 unit building with 20 people living in it goes into foreclosure, everyone in the building will feel the reprucssions.

  • The media are whores. They play no role at all like the founding fathers intended. They don’t reveal the truth to keep the powerful in check. They bend the truth, they create news where there isn’t any, and they exaggerate and whip everyone into hysteria to sell sell sell and make money money money.

    Thank God for Jon Stewart. He is literally the only person calling out the media on their idiocy.

  • Brooklynnative – You also have to consider condo’s and coop’s that may have 10 or 20 mortgages in 1 building.

    I think in general though, it is fair to day that the actual number of subprime loans is relatively small compared to the number of overall loans. The Media is definately over-blowing and skewing this whole scenario with statistics…

    Its alarming to say 20% of all subprime mortgages are defaulting, but if you mention only 5% of loans are subprime, that is quite another thing.

  • Many of the foreclosure homes in BS and CH are investment properties. Many of the owners do not leave in the area at all…

  • Many of the foreclosure homes in BS and CH are investment properties. Many of the owners do not leave in the area at all…

  • Unfortunately 1:00 the media perpetuates the demand. Hysterical and alarmist news stories get ratings and attention, they are only giving us what we demand.

    If nobody paid attention to this stuff, they would quickly change their tune – but we keep digesting it, so it will never leave.

  • Where would you put Greenwood Heights and South Slope?

  • “…zip code is not the best indicator of what area or neighborhood you’re referring to…”

    It’s also not the best indicator of which nabes have escaped foreclosure either. All we know is that Clinton Hill and Prospect Heights are fair game. And it has been said many times during the RE heyday (2005-06) that sub-prime did not make up a significant amount of mortgages in NYC. Just like GDP and corporate earnings, this claim is being revised with a vengeance.

  • ” The inventory for houses is dismal though, that’s what stinks about looking to buy right now.”

    Where foreclosures go, inventory will follow.

  • 12:19,

    This bust will dwarf that of the 90′s. The bigger the boom…

  • Most coops, including my own, would never allow super-leveraged loans. We demand 25% down. Don’t look to coops for bad news. Condos are something else again.

  • “And it has been said many times during the RE heyday (2005-06) that sub-prime did not make up a significant amount of mortgages in NYC. Just like GDP and corporate earnings, this claim is being revised with a vengeance.”

    Where do you see that 1:16. Based on the numbers above, I would imagine the percent of subprime is very low. Based on the above table there are 13,547 subprime loans in Brooklyn which consists of around 3 million people. I dont klnow how many total mortgages that equates to, but 13,547 seems like an awfully low number to me.

  • subprime does not mean super-leveraged, it just means lower credit score or undocumented income.

    I agree coops will probably not see foreclosers at the same level as other types of homes, but they are definately not immune.

  • The foreclosures at coops will be due to old-fashioned reasons. I would be surpirsed if more than a handful of coop foreclosures happen due to “innovative” loans.

  • I see it wherever Chuck Schumer is quoted, 1:28. Can you imagine 13,547 different residences? Never in your life would you even visit that many homes. I don’t get the poplulation argument. That number includes children and minors which Brooklyn has plenty of. Let’s estimate how many different homes/apartments have outstanding loans on them including HELOCS.

  • Crown Heights is on sale–time to SWOOP, baby!

  • I had no idea northern Clinton Hill was part of downtown brooklyn, or that Greenpoint extended to Bedford and South 2nd.

    Nice that a bank keeps such sloppy financial records.

  • “Can you imagine 13,547 different residences? Never in your life would you even visit that many homes. I don’t get the poplulation argument. That number includes children and minors which Brooklyn has plenty of. Let’s estimate how many different homes/apartments have outstanding loans on them including HELOCS.”

    Yes, I can appreciate 13,000 residences seems like alot, and no I havent visited clsoe to that many. But what I can tell you is I fly over Brooklyn alot, and there are a hell of alot more than 13,000 residences, many, many, many, more than that.

    As a percentage of overall mortgages in Brooklyn, it seems to me subprime is a pimple. Forget about HELOC’s, etc. This panick inducing article is about foreclosure and subprime – to me these figures are insignificant.

  • Foreclosures in Park Slope!?! impossible!!

    everyone there has made 10 million dollars in equity in the past 6 months.

  • If the rest of Brooklyn was more like Park Slope, we wouldn’t have this subprime mess or the lowering of property values. Park Slope is the place to be.

  • Sellers in Park Slope are now having to sell for less than they could last year, 2:52. That’s called a softening market. But go ahead and be in denial.

  • Well according to my calculator, 11201, which is brooknly heights/slope area has a 38% forclosure rate. Care to do a story on that area? Let’s not play up the foreclosure hysteria. I know it sells newspapers and websites, but again, some perspective until we actually have hard evidence of masses of homeless folks and marauding hordes of disgruntled brokers.

  • If the issue is the Brooklyn real estate market, the small number of foreclosures isn’t the point.

    Given NY’s rapid price rises, most people who get in trouble with their loans should still have some equity, unless they bought or extracted all their equity in the last year or two. Those people are going to sell, not go into foreclosure; they won’t show up in the foreclosure statistics, but they will affect prices.

    If buyers are not willing to jump, they’ll cut their prices. Once buyers notice prices dropping, they’ll be more inclined to hold out for bargains, and that will force other sellers to cut as well.

    Once sellers readjust their ideas of what their place is worth, cuts may come very fast. People aren’t going to put their lives on hold for long just because the house they bought for $50,000 is worth $1.5 million instead of the $2.5 million they hoped for last year. Given what’s happening in the rest of the country, you can still trade your Park Slope brownstone for a fully paid retirement at the resort town of your choice.

    So the foreclosure numbers are just a indication of the trend, not an indication of how big the problem is.

    Meanwhile, the most interesting statistic is how many loans are still left to adjust — which should give some indication of how many people are not yet in trouble but may be soon. That’s on the end of the Fed’s spread sheet, and the numbers are big, especially if you include the Alt-A (liar’s loans) too.

  • to 3:33: you are misreading the chart. The foreclosure rate on 11201 SUBPRIME mortgages (of which there are only 36 — not many people with enough money to buy in Brooklyn Heights have low credit scores, which is what defines “subprime”) is 13.9%.

  • shouldn’t we be looking at the total number of households that have mortgages in Brooklyn for a true picture of the housing “crisis”. I mean, it’s like a doctor, telling someone they are going to die, watching them turn white with fear, then telling them that he meant that they would die of old age. Last I checked, there were about 2.5 million people in Brooklyn, and I would guess that there are upwards of half a million mortgages compared to the few hundred “subprime” forclosures. Some perspective please!

  • Park Slope = MILF central

  • Interesting note on the new home sales data released today:

    “Regionally, the northeast is the least important part of the country for new home sales, but it is also the strongest. There were 65,000 new homes sold in that region last year, up 3 percent from 2006. But the other three regions were all down at least 26 percent, with the west (California, there you go) off the most at 32%.”

  • I agree 3:42 (and 3:43 incidentally). If you do the math on the percentage and # of foreclosures it works out to be around 1300 – 1600 total homes (Or Units) in foreclosure. Is this really something to panic about? Maybe in Omaha or Fargo, but not in Brooklyn, this represnts something like 1 – 2 % of all households tops.

    Perspective people – Dont just accept the hype the media feeds you at face value. Statistics always lie, and you can make them show whatever you want.

  • 4:40 –
    I went to the fed data and did the math in the excel sheet, and for Brooklyn:
    of 13547 Subprime loans

    1984 In Foreclosure
    1255 30-59 Days Overdue
    576 60-89 Days Overdue
    618 90+ Days Overdue
    83 REO
    4516 in some kind of trouble

    Another 3556 with ARMs resetting between Apr 08 and Sep 09.

  • It appears in the short term that ARM’s re-setting is sort of taking care of itself in that the re-set rates are very low due to historically low Libor rates. At least in the short term, this may not be the major issue everyone feared.

  • When I lived in Fort Greene, my zip code was 11205. Now that I live in Bed-Stuy, my zip code is still 11205. These stats are useless without any real knowledge of the neighborhoods.

  • Where is the What? I miss the What.

  • The what is dead – he was foreclosed on (See post from earlier today) and comitted suicide shortly thereafter.

  • Has anyone noticed how boring this place has become since the What checked out? Everyone always flamed him, but damn, he livened up the joint. Mr. B you’ve got to get ‘em back. This kind of a post used to generate 150 posts easy back in the day. Outta here.

  • The What Lives!

    The What

    Someday this war is gonna end…

  • 11:05 is an asshat pretending to be The What.

  • You know Charlie Chaplain entered a look-a-like competition of himself. He came in third place.

    One note: This is the beginning of a Depression. I am very busy know and can’t post like I want to.

    Believe it it’s The What. I’m not cursing (On Meds)

    The What

    Someday his war is gonna end….

  • I always assumed The What was just a schthick or bit of online performance art.

    Not that I disagreed with much of what (s)he said.

    The Whatever

    Someday this sore is gonna mend…

  • “11:05 is an asshat pretending to be The What”

    The What IS an asshat. It’s his job.

  • That’s MR asshat to youse!