The number of Brooklyn foreclosures for sale is expected to rise following the New York Court of Appeals' ruling on the case involving the Stuyvesant Town apartment building. The court ruled that owners of the apartment building should pay nearly $200 million in damages and rent overcharges to tenants of about 4,000 apartments.
Landlords and tenants have been trying to figure out what would be the impact of the ruling issued by the state high court on Peter Cooper Village and Stuyvesant Town on apartment owners who have been struggling for some time now. Industry experts are worried that the ruling would cripple the real estate industry while tenants are concerned about their rent.
Many apartments in the area are going into Brooklyn foreclosures for sale because of lack of tenants and adjustments in mortgage rates. The ruling is another setback for financially struggling landlords like Stellar Management of Riverton Houses and Tishman Speyer Properties of Stuyvesant Town which paid exorbitant prices for their residential properties during the peak of the housing market.
They turned rent-regulated apartments into market-rate units on the assumption that rents would further rise. Instead, rents dropped drastically since 2008 and property values declined as landlords tried to pay their mortgage loans.
Industry experts said that many lenders are reluctant to restructure troubled loans by landlords, such as the case of Tishman Speyer that acquired Stuyvesant Town. Experts said that lenders would want a fresh cash infusion before they would agree to restructure any troubled loans. This problem is being experienced by other apartment buildings in Queens, Bronx and Brooklyn.
Industry experts also pointed out that the ruling would affect landlords who are planning to buy distressed apartments across New York City. With the ruling, they would think twice before pursuing their plans to buy distressed apartments.
Some groups have estimated that as many as 70,000 apartments are affected by the ruling. According to recent market data, there are nearly one million apartments that are rent-stabilized in the city.
Meanwhile, the Department of Housing and Community Renewal is expecting a flood of petitions from thousands of renters who will claim that they have been overcharged by their landlords who are receiving tax breaks.
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