NYPost: $15 Million Hamptons Foreclosure



We can always count on the New York Post for thoughtful, contemplative analysis: The latest such example is the increasing issue of foreclosures in the Hamptons:

"Homeowners in the some of the toniest ZIP codes in the Hamptons are facing a
frightening reality – they can’t afford to foot the bill for their high-priced
homes, The Post has learned.

In the first three months of this year, banks have launched preliminary
foreclosure actions – known as lis pendens proceedings – against a record 120
borrowers in East Hampton and Southampton towns.

Twenty percent of those borrowers live in homes that are worth more than $1
million, according to figures from the Suffolk County clerk. And the list gets longer every week."

Now before you get too concerned, understand that a total of 10 homes have actually gone into foreclosure. A lis pendens action is merely a claim or suit filed against real estate (usually regarding title  or ownership). In a beach community like the Hamptons, some of these could easily be absentee owners’ errors or oversights. I would have liked to see the lis pendens data for teach of the past 10 years.

What is somewhat unusual are some of the biggers busts, like this $15 million Westhampton chateau pictured above. Real estate brokers interviewed in the article seem to be split: Some note the "high-end sector remains strong," and that "doomsday predictions were premature." Others are are bracing for the impact of Wall Street layoffs:

"Corcoran broker Susan Breitenbach said young Wall Streeters who gobbled up
trophy properties in recent years are starting to suffer. She recalled getting
calls from Bear Stearns employees desperate to unload their East End homes after
the company’s recent implosion. "These are people who are used to success," Brady said. "There is a level of
denial and embarrassment when I have to call [people] to ask about mortgage

Another top-selling East End broker who spoke anonymously said the area was
bracing for fallout from impending Wall Street layoffs. "That wave hasn’t even hit yet," he said. "A lot of them who bought second
homes are already trying to shed them. You’ll always have the super-rich who can make moves out here no matter
what," the broker said. "But I think there’s a dose of reality on the way."

Well, we will find out soon enough . . .


NYPost, May 12, 2008 —

What's been said:

Discussions found on the web:
  1. Mephisto commented on May 12

    So when do the pinstripes actually start getting their pink slips and start walking? I thought Gasparino said after tax day some time.

    I know one guy from BSC…going through each day white knuckled. He doesn’t know a thing, can’t plan a thing.

  2. Rob Dawg commented on May 12

    We can always count on the New York Post for thoughtful, contemplative analysis…

    Dammit Mr. Ritholtz… don’t you know how expensive both beer and keyboards are getting? At this rate lost hops will offset any East Egg real estate savings. LoL funny sir.

  3. li phil commented on May 12

    post or not, this is an interesting article –

    120 lis pendens in three months? i believe the article says that’s a record for the area…not sure that warrants such blithe dismissal on your part….

    assuming the affluent can’t have mortgage problems – especially on their second homes – is a bit simplistic…

  4. li phil commented on May 12

    post or not, this is an interesting article –

    120 lis pendens in three months? i believe the article says that’s a record for the area…not sure that warrants such blithe dismissal on your part….

    assuming the affluent can’t have mortgage problems – especially on their second homes – is a bit simplistic…

  5. Thomas Zoellner commented on May 12

    The monthly payments for 30 year or 15 year fixed mortgages are the main considerations for many people who are looking to buy a home. No-one wants a mortgage hanging around their neck forever but with home buyers entering the market later, an early repayment of this loan is important. However, before you rush in and sign any papers, there are points to contemplate. One point to remember is ensuring that your monthly mortgage repayment remains the same throughout the entire period of the loan.

  6. Banker commented on May 12

    The same thing that got people in trouble with a first mortgage, got the more wealthy individual with the second mortgage.

  7. michael schumacher commented on May 12

    not paying your mortgage in the worst housing slump that we have ever seen is NOT an “oversight” . The rich are notoriously cheap bastards and will ALWAYS know what they are doing. Funny that in that neck of the woods it’s just an “oversight” however everywhre else that foreclosures are skyrocketing it’s an “epidemic”.

    You’re talking the kool-aid BR…


  8. Steve Barry commented on May 12

    Yet, the low volume rally on Wall Street continues…36 of the last 37 trading days, QQQQ volume could not break its 100 day MA…must be a record. Short interest is ridiculously low on QQQQ names…Short ratio on AAPL for instance is under a half. As soon as volume ever picks up, watch out below.

  9. A Devoted Reader commented on May 12

    Not sure if this has been reported, as I don’t regularly read the comments section.

    Your site’s performance improved briefly for Firefox, but it’s very slow again.

    I’m also now getting multiple overlapping tracks of audio starting immediately after loading. Not sure where they’re coming from.

  10. Steve Barry commented on May 12

    Another impressive big volume day…QQQQ got to just over half its 100 day MA for volume.

  11. Dumpster commented on May 12

    I took a quick look on realtytrac.com, and that area is starting to light up with preforecloures. Although most of the auction properties (later in the process) are still currently towards the east and the not so nice areas — that is not so nice when compared to where the uber rich hang their schwangs.

  12. Elizabeth Harrow commented on May 12

    This reminds me of the story I read — also in the Post — about Goldman Sachs discontinuing complimentary car service and beverages for their traders in response to economic strain. I know suffering is relative, and I really want to empathize, but instead I have a distinct feeling of schadenfreude (especially as I prepare to leave the office for the day and drive my Hyundai back home). Janeane Garofalo once said there is no surer cure for hubris than to be caught stealing toilet paper, but I think that having your vanity house in the Hamptons foreclosed on might also work.

  13. Pat G. commented on May 12

    33% lower and you can snap it up for 2/3rds of the price and use the 1/3rd you saved to buy something else nice.

  14. Gerg commented on May 12

    Isn’t it more likely these homes are now worth less than the buyers’ equity and it just doesn’t make sense to keep paying for them? Let the bank foreclose if it wants to but it’s just going to end up costing the bank.

  15. Christopher commented on May 12


    Just a small point. Most of these homes could have been bought for cash. The owners simply took out a $3 or $5 million mortgage because they wanted to keep the money in the stock market. They have probably lost a good chunk of that money in the market YTD.

    And don’t forget, most of these homeowners are hangin on and hoping the summer rental season bails them out. $100,000 a month for the summer can really help you out of a tight jam.

  16. Paul in NYC commented on May 12

    Yeah right. So long as you can find someone willing and able to pay $100,000 a month.
    And I turn to the Post for thoughtful, contemplative analysis about as often as I expect thoughtful and contemplative insights from President Bush.

  17. Expat commented on May 12

    Ah, the emotional stress for a Master of the Universe. I was working in NYC back in ’87 and recall the new industry which developed post crash, specialized psychological counseling for wealthy bankers and traders forced to give up their summer homes or ski lodges. Oh, the humanity!

    Well, don’t fret. We know how it turned out for all of them. Richer than ever before and long since retired. This new generation will “suffer” for a year or two and be driving Maseratis to the Hamptons before you know it.

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