More Multi-Family Buildings in Foreclosure
According to the Washington Post, foreclosures are rising for multi-family buildings, so tenants may have to either live with substandard conditions or eviction.
As reported in the Post: "A recent study by Richard Parkus, the head of research in commercial mortgage-backed securities at Deutsche Bank, found that loan performance on multifamily buildings is deteriorating at a dramatic pace. Some 65 to 75 percent of multifamily buildings could face problems refinancing at their current rates, he said in an interview. These problems could "sit and fester" for a while, he said, or result in a burst of loan failures."
While the specter of renters being evicted is not a new one, the weakness in the commercial real estate market and the ongoing employment crisis may be increasing the likelihood that the problem will continue to grow.
As less tenants can make rent and more landlords cannot pay their debts, the remaining tenants have to survive with the bare minimum of services.
Even in the case where Fannie Mae has taken over a property, the court-appointed receiver had to go to state court to get Fannie Mae to pay $20,000 for maintenance costs for a building in the Bronx.
The problem is not isolated to New York City. D.C., Chicago, Los Angeles, and smaller cities such as Des Moines are seeing doubling and tripling in default rates on multifamily properties from a year ago.