Real trouble lies in rising default rates

Washington politicians and editorial writers throughout the country are bashing banks for foreclosing on hapless homeowners. And, indeed, foreclosures are on the rise. However, an even larger wave of foreclosures is coming to New York City, say experts who base their predictions on rising default rates, combined with the difficulty of refinancing underwater homes. The increasing numbers of distressed properties, they say, portend a substantial decline in property values throughout the city. “If you are looking at the statistics, it cannot possibly have hit bottom,” says Joshua Stein, a partner in the real estate practice group of Latham & Watkins, and chair of the education committee of the Mortgage Bankers Association of New York.