The Sub-Prime Loan Crisis in NY Apartment housing: How Collapsing Predatory Equity Deals Will Harm Communities and Investors

We explore the serious danger to the stability and viability of working class neighborhoods in New York City, as well as lenders, investors, and commercial credit markets. This paper cites evidence from loan servicer reports that the speculative nature of predatory equity loans makes them three times more likely to be in danger of default then similar, non-predatory loans. We also provide a detailed analysis of the underwriting criteria of a cross section of loans including some high-profile real estate deals to show why they are speculative and likely to fail. We will also outline some possible solutions, including the need for an ad hoc intergovernmental working group to work to pro-actively preserve this at-risk affordable housing by supporting tenants and preservation purchases.

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