Bronx Pre Foreclosures Have Role in Rise in NYC Foreclosures- By: John Cutts
Bronx pre foreclosures contributed to the increase in New York City foreclosures in the first quarter year-over-year as a number of properties hit with initial foreclosure filings eventually became repossessed units.
During the first quarter, almost 5,000 housing units in the city were notified of default and foreclosure, up by 1.5 percent from the previous quarter and a sharp jump of 16.2 percent from the first quarter of last year.
Of these distressed units, a big percentage already entered public foreclosure auctions in New York and were subsequently bought back by banks and counted in their books as real estate homes for sale.
Among areas in New York State, the Bronx was 16th in foreclosure rate in the first quarter, posting a 10.7-percent jump in filings year-over-year but posting a drop of 6.6 percent quarter-over-quarter.
The area with the highest foreclosure rate in the city in the first quarter was Staten Island, where one foreclosure was posted for every 284 homes. The 631 homes in foreclosure marked a jump of 26 percent from the first quarter in 2009. Compared to other counties in the state, Staten Island ranked fourth.
Bronx pre foreclosures were not the only ones contributing to distressed listings in the city; record numbers of units in foreclosed residential buildings also accounted for the high number of distressed units in New York.
Community advocates estimate that there are 4,700 rental apartment units in dozens of foreclosed buildings throughout the city and that around 110,000 units are distressed.
In the Bronx, among the distressed buildings are the ten foreclosed buildings owned by a trust handled by Wells Fargo and LNR Partners. These buildings were formerly owned by Los Angeles-based Milbank Real Estate, which lost the buildings to foreclosure in 2009 when it failed to pay its $35-million loan owed to Deutsche Bank. The bank later sold the loan to an entity now run by Wells Fargo.
Milbank was one of many investors who purchased buildings in low-income communities in New York at inflated prices during the boom, hoping to gain profits by forcing out tenants, gentrifying the buildings and then increasing rents to profitable levels.
The dreams of the investors, however, did not pan out, as the crisis tightened lending and overwhelmed the overleveraged buildings.
The pace of Bronx pre foreclosures slowed in the first quarter compared to the previous period, raising hopes of improvements in the employment situation and in loan modification efforts in the area.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.