New York, NY —

The owner of a large group of mostly rent-controlled apartments in Harlem will likely go into mortgage default.

The Rockpoint Group and Stellar Management have warned creditors they can't make the September payment on the Riverton Apartments Complex near Madison Avenue and 135th Street.

Manus Clancy is with Trepp LLC, which does data analysis of mortgage-backed securities. He says this kind of mortgage trouble is unusual for New York.

CLANCY: Normally you see stories like this developing. You'll see a developer miss one payment then a second then a third. So you see the process evolve. Here you had a situation where the borrower was current in his payment in August but flagged that he wouldn't be in September.

REPORTER: A note from one of the creditors says Stellar Management wasn't able to convert Riverton apartments from rent control to market rate as quickly as hoped. Only about ten percent are currently market rate.

Riverton is a more that twelve hundred unit complex in Harlem. It was built by the Met Life Corporation after World War Two.