Shelly Banjo reports:

The foreclosure mess is casting a shadow over New York’s Hamptons this summer. One result: An 18,000-square-foot Bridgehampton home has been reduced from its $27 million asking price to “just” $19.5 million.

The Bridgehampton mansion, which was built by Burns Development Corp., on more than 4 acres of land, played host to the 2006 Hamptons Designer Showhouse, an annual event where notable interior designers outfit a Hamptons home, showcasing trends in luxury home design to potential clients. The home, which features a pond, five-person elevator and something called ‘a flower-cutting room,’ went on the market once the showcase was over. But late last year a foreclosure notice was filed against the property’s $4.4-million mortgage.

New York’s Corcoran Group holds the listing for the 8-bedroom, 9 1/2-bath house and would not comment. (See a virtual tour of the home, hosted by Michael Burns of Burns Development.)

“We’ve seen a significant increase in million dollar-plus homes being offered to us, where before we almost never saw houses at this level,” says Jacob Benaroya, president and managing partner of Biltmore Capital Group, a New York-based firm that purchases problem loans from mortgage lenders. Although Mr. Benaroya has no connection to this Hamptons mansion, his firm deals with other properties in the area.

But “this type of specialty home” is harder to sell, he adds.

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Corcoran Group

In the first three months of this year, banks launched preliminary foreclosure actions against a record 120 borrowers in the towns of East Hampton and Southampton, according to a recent article in the New York Post.

Other Hamptons high rollers mentioned in the NY Post include Janice Becker, a regular on the Southampton village social circuit who is facing foreclosure on her multimillion-dollar Wyandanch Lane property and advertising veteran Ransel Potter who is defaulting on a $1.8 million mortgage on an Amagansett parcel.

“These high-end areas were thought to be immune to foreclosures…but we’ve now seen that being wealthy doesn’t preclude you from being stupid with your money,” Mr. Benaroya says.