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How Many NYC Rent-Stabilized Apartments Face Severe Financial Distress?
New York City has about 1 million rent-stabilized apartment units. The owners of more than 10% of those are undergoing severe financial distress, according to NYC’s Department of Housing Preservation and Development (HPD). Among those 100,000+ units, over 25,000 of those units have visibly deteriorated (Hat Tip: AP). What does that mean for New York City apartment building investors? One of the following scenarios will unfold: (1) banks will continue to “extend and pretend” their NYC apartment building loans to some point in the future when real estate values rebound; (2) banks will have to mark their New York multifamily mortgages to market, and then take appropriate steps to foreclose when the owners cannot refinance or make appropriate payments; (3) banks will, presumably with Uncle Sam’s help, downward modify the principals on billions of dollars in first mortgages.
It appears that many underwater borrowers are holding out for Door #3, because this seems to be the most likely scenario to allow them to keep their properties.
Nowadays, this problem is very actual not only in NYC, but in the other cities.