Foreclosure Reality

There is no doubt about it. While many would say Brooklyn real estate is suberb (I agree), there will be certain neighborhoods experiencing high foreclosure rates. One such neighborhood...Bedford Stuyvesant. A neighboorhood with the biggest housing stock of well built Brownstones. The true wealth of Bed Stuy will be discovered. For many it will be a tough road to leave the roots because it's not affordable. It is becoming a diverse community.   

There is more to Bed Stuy. There are the many people living in over-leveraged homes. Basically, their mortgage is greater than the value of their home. There are many who cannot afford it because of non paying tenants or an increase in their mortgage payments. The fact. It was (and still is) easy to get a home and even easier to get MONEY from a home. 

So many owners are experiencing adjustable rate mortgages kicking in...All of s suddent their interest rate jumped up and so did their monthly payment. Most people probably did not know the exact amount of their higher mortgage payments. All they knew was at the time they could afford the monthly payment.  They didn't realize that there is not a single person on this planet who understands all of the words in a mortgage document including the adjustable rate rider.  Let’s face it folks most people’s wages are not going to increase as much as the interest rate on an adjustable.

Think about all of the people with 100% financing. How about 106% financing. Yes, the lender will give you 106% which means more money on top of what you pay for the house. So basically it does not cost you a dime to buy a property. So let’s see… if you bought a property 1 or 2 years ago with 106% financing and the value of property did not appreciate by at least 6%, you have a problem. Then if you got an adjustable rate mortgage that increased in 1 or 2 years, you have a BIG problem.

Let’s face it…Bed Stuy is a Prime Place for Sub Prime Loans. That’s right. The bulk of 100% and 106% loans in Bed Stuy are considered Sub Prime. You know…Sub Primal…Sub Primitive…Less than Good. Anyway, it was easy to sell these loans in a neighborhood many people on the outside did not pay attention too.

From this there will be a great many foreclosures. In effect, causing a large shift of middle class people out of Bed Stuy. This will create a price drop in the area. And the people on the side lines, with cash in hand will do VERY WELL.

For the savvy investor or long term homeowner, it is their paradise to make money or to create their neighborhood.