Brooklyn Sees Biggest Increase in Foreclosures Citywide as Rates Climb to Pre-Moratorium Levels

The number of foreclosures in Brooklyn has climbed back to levels seen before the pandemic-generated eviction moratorium was put in place in early 2020, and the borough had the highest number of foreclosures as well as the largest annual increase in foreclosures citywide in the third quarter. Although it can take years for a lis pendens to result in a foreclosure in New York City, the increase comes amid a time of inflation and higher interest rates, which can make renegotiating or refinancing a mortgage more challenging.

Foreclosures in the borough hit 168 in the third quarter, up 185 percent on 59 foreclosures seen at the same time last year, according to a third quarter report by PropertyShark. Of the 168 foreclosure cases, 22 were filed in the ZIP code 11234, which includes Marine Park, Flatlands, Old Mill Basin, Mill Basin, Bergen Beach, and Georgetown.

The ZIP code is largely covered by Community District 18, although that district also includes Canarsie. City data says homeowners live in almost 56 percent of the area’s houses, much higher than the citywide average of 29.8 percent. The average annual income in CD18 is $76,340, according to Citizens’ Committee for Children data, and neighboring Community District 15 has an average of $64,106.

According to the report, the last time Brooklyn saw a similar number of foreclosure filings was in the first quarter of 2020 – just before the moratorium was put in place. This quarter’s numbers topped those seen in the final part of 2019, which logged 153 foreclosures. Brooklyn also saw the most lis pendens filed citywide, with a total of 645 in the third quarter of the year – a 5 percent increase on the same time last year.

In July 2022, supervising attorney in The Legal Aid Society’s Foreclosure Prevention Unit Oda Friedheim told Brownstoner she had heard mortgage defaults exceeded those that occurred in 2008 after the crash. “Based on what I note in speaking to struggling homeowners, many are still recovering from the loss of employment and or reductions in hours as a result of Covid,” she said at the time.

Over the last year, mortgage interest rates have climbed and the Brooklyn real estate market has been relatively stagnant as a result.

Citywide, there was a 44 percent increase in foreclosures on last year. Staten Island was the only borough to avoid an increase in foreclosures in the third quarter compared with 2022, with the number dropping from 62 to 35.

In New York City, it takes years for a lis pendens to result in foreclosure. Many homes in Brooklyn still have active lis pendens stemming from subprime loans issued before the 2008 crash.

Areas in Brooklyn that have historically had heavy amounts of lis pendens and foreclosures, such as central Brooklyn, are also areas where predatory lending and deed fraud are common, and that were formerly redlined. Notably, 11234 was not redlined.

The quarterly report issued by PropertyShark looks only at single- and two-family homes, condos, and co-op units.

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