Foreclosures Creep Upmarket
By ELSA BRENNER
THE 54-year-old red-shingled ranch has peeling paint, an untended yard and an overall appearance of disrepair. Its look may seem consistent with the image of a house in foreclosure — but not its address: Greenwich Road in Bedford.
These days, when it comes to foreclosures, very little is typical “and no community is immune,” said Mark Boyland, a broker with Keller Williams NY Realty.
In Scarsdale, where the median household income is $217,000, among the highest in the country, 57 properties, or one in 254, are in some stage of foreclosure, according to RealtyTrac, a firm in Irvine, Calif., that tracks foreclosures.
White Plains has 201 properties, or one in every 133 houses, in some stage of foreclosure — which covers everything from an initial notice of pending action to the lender’s acquisition of the home.
One example, a well-maintained $1 million single-family colonial, looks like any other on its street. But its landlord stopped paying the mortgage six months ago, although he continues to collect $8,000 a month from his tenants, said Mr. Boyland, who is also president of the Westchester-Putnam Multiple Listing Service.
What’s happening in Westchester is not atypical, said Rick Sharga, the president of RealtyTrac. “There is no ZIP code, no neighborhood, no place except perhaps the White House, that is not feeling the effects of the current downturn,” he said. “What’s unusual this time, compared to the late 1980s and early 1990s, is that much higher-ticket homes are also involved.”
Such homes remain in the minority, however; the densest concentration of foreclosures is occurring in low-income areas. Within Westchester, Yonkers is in the lead in raw numbers, with 655 houses, or one in 107, in some stage of foreclosure, and Mount Vernon is in second place, with 519, or one in 53.
In Port Chester, where housing prices tend toward the lower end of the spectrum for Westchester, 128 homes are in foreclosure, one in every 128, RealtyTrac said.
But the problem there is expected to worsen soon, said George Groves, an agent with Re/Max Prime Properties in Scarsdale. With 52 two-family houses for sale and only two in contract, the situation in Port Chester is “a real disaster in the making,” Mr. Groves said.
For Westchester as a whole, the number of foreclosures as of Sept. 1 was 2,984, equal in one in 119 housing units. By comparison, in Queens County, the number was 10,654; in Suffolk County, it was 9,091, according to RealtyTrac.
As the numbers continue to mount (they were up 11 percent in Westchester during August from the same time a year ago), each element of the market is coping with fallout of one kind or another.
Some investors are profiting, and real estate agents like Mr. Groves have “a ton of work” — though he emphasized, “It’s very specialized and not for every broker.”
In a recent transaction, Mr. Groves represented investors who bought a four-bedroom raised ranch at a bank auction for $320,000. The investors then listed it for sale for $399,000 and within a week received eight offers. Even after fees and the real estate commission, they will realize about $60,000, Mr. Groves said. “That’s what I call flipping a property,” he added. “But it doesn’t always happen that way.”
For the lending institution, chances are that such transactions will involve a loss. Take, for example, the case of a 30-year-old four-bedroom split with an indoor pool in Rye Brook. The owner bought it several years ago at the height of the market for $1.1 million and then took out a second mortgage to remodel. But after his payments went up, he defaulted on the mortgages. The house was sold for $870,000, with the bank swallowing a $1 million loss, Mr. Groves said.
And then there are the homeowners who lose everything, including their good credit ratings. Surprisingly, said Mr. Boyland of Keller Williams, not everyone these days is taking such losses to heart.
Gary Leogrande, a colleague of Mr. Boyland at Keller Williams, says the less-than-concerned attitude toward foreclosure is shown by some sellers at every economic level, from those in less well-to-do neighborhoods to those in upscale communities like Harrison and Rye.
Because a foreclosure takes so long — sometimes two or three years — some owners unable to keep up with payments and taxes in essence decide to live rent-free for a year, then start stalling when eviction proceedings begin, Mr. Leogrande said.
“Certainly, there are some victims in this wave of foreclosures,” he said, adding that while “we tend to feel sorry for them,” some people these days “are just playing the system.”
Enough economic tools are available to avoid a foreclosure, he said, if a client really wants to. Forbearance agreements can be struck, with banks accepting lower payments in the short run. And short sales can be negotiated, in which a home is sold for less than what is owed on the mortgage.
That way a bad credit rating can be avoided. But not everyone is worried about that, according to Mr. Boyland. “At that point,” he said, “their credit isn’t in great shape, and they’re not going out to buy a house again soon. So they just shrug their shoulders and walk away.”
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