Report: Subprime Foreclosures Rampant in Brooklyn
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…
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]
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.
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…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.
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.
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.
“…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?
“…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.
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.
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.