This remains true even though the likelihood of foreclosure is fairly small among New York City co-cops and condos. Data from Crain's New York Business and the foreclosure specialty-press Profiles Publications say the number of city foreclosures rose just 18 percent from the latter half of 2005 to the latter half of 2006, compared with 45 percent nationwide.

In more recent and economically troubled times, an August 2007 New York Post report cites figures from RealtyTrac that says five-borough foreclosures jumped 55 percent from a year before — in raw numbers, from 1,648 to 2,561 homes. But that was mostly houses. For co-ops and condos, a clearer picture comes from the mere 12 percent rise that the paper reported for Manhattan, where apartments far outnumber townhouses.

Despite that relative rosiness, however, virtually no board-member of a co-op or condo with an apartment facing auction would speak about the subject when contacted. Nearly a dozen called simply did not call back at all, after two attempts each. Among those who did, two even denied an apartment was facing foreclosure, despite auction listings in legal notices publicly available online.

Why the zip-lipped panic? It's a matter of soiled-goods perception, says Jessica Davis, head of Profiles Publications and a lecturer at the New York University School of Continuing and Professional Studies. "A buyer doesn't want to buy in if it's a troubled building."

It happens in rich and middle-class neighborhoods alike. "There are people whom you never in a million years would think are having financial problems," Davis says. Auctioneer Bill Mannion agrees: "A lot of people are stretched out, a lot of people bought over their heads or through catastrophe or a family situation, and can no longer afford to pay their mortgage or maintenance." And maintenance is usually the first thing to go, explains Mannion. "If they have a non-payment issue with the lender, that would more adversely affect their credit rating than not paying their maintenance."

Three Months, Foreclosure

What can a board do to minimize the impact on the building when one apartment faces foreclosure? Step one is to act quickly.

"My first reaction would be to turn it over to our legal counsel if they miss two months," says Samuel D. Williams, board president at The Phoenix, the 32-story, 184-unit co-op at the building lot of 1090-1108 Third Avenue/187-193 E. 64th Street/158-160 East 65th Street. Managed by Suz Landi of David Frankel Realty, the building — there's just one on the lot, according to the Department of Buildings — had a January 10 auction scheduled for a 30th-floor apartment with a lien of $264,936.

Jim Goldstick, vice president at Mark Greenberg Real Estate, agrees with Williams' approach. A co-op board, he says, should begin foreclosure proceedings "once a shareholder falls behind in arrears three months at the max. Notify the lender that the shareholder is in arrears, and in the vast, vast majority of cases, the bank will then pay the maintenance to protect its lien, because the bank's lien is subordinate to the co-op's maintenance."

It isn't a pleasant task, particularly in a small building where everyone knows each other. "Unfortunately, sometimes they're your friends and neighbors" who may be facing foreclosure, says Goldstick. Regardless, "you have a fiduciary responsibility to do what's in the best interest of the co-op. And the co-op needs to collect its full revenue to pay its bills. That's why you have a lawyer and a managing agent — we'll do the dirty work," he says. "That doesn't mean we don't act like human beings. Every meeting, we go over the arrears report. If somebody had a death in the family or was sick, and the board knows about it, the board will be sensitive to issues of, 'Well, he just got out of the hospital and let's give him a month to get back on his feet.' But those are few and far between."

In general, says Goldstick, "Before we serve a legal notice, we'll either call or write the shareholder and give them the opportunity when they're less than three months in arrears to try and work something out," meaning an installment plan. Gerard J. Picaso, president of the management firm Gerard J. Picaso Inc., describes one recent case in which "we made an agreement for [the delinquent co-op shareholder] to pay off his five months of maintenance in three monthly installments."

The procedural path to auction is straightforward. The building's attorney "officially gives notice of the default, accelerates the note with the lender, and does a judgment-lien search for city, federal, and state tax liens that have to be noticed," Mannion says. "In a co-op situation, you can basically go from zero to auction in 45 days, since you're not going through the courts for a 'judgment of foreclosure and sale'," as condos must.