It is very common for people to believe that mental retardation is passed on through genes. But, this is only one of the causes. Intellectual disability can occur due to several reasons. Besides genetic causes, some of the other causes can be - lack of oxygen at birth, high fever or fits during childhood, head injury during childhood, malnutrition etc.
Firstly, it is important to ascertain whether your neighbour's younger son was born with mental retardation due to genetic reasons or did he acquire mental retardation after birth due to the above mentioned environmental factors (eg, injury, malnutrition, neglect, medical disorders).
If this person has a genetic intellectual disability, he would also have certain characteristic features (such as upward tilted eyes, flat nose, thick lips, short neck, enlarged head, short and stout body, possible deformity of some body part etc). These features are seen if the mental retardation is genetic in nature.
But if the person has acquired mental retardation due to head injury etc, his physical appearance would be more or less normal like any other adult. But he would have problems with language, self care skills etc. If your neighbour's son is suffering from a genetic intellectual disability, then it is possible (but not definite) that the brother's children could also suffer from some developmental delays. But if the younger son has acquired mental retardation due to a non-genetic cause, then his elder brother does not face this danger, and his children would be born absolutely normal.
I would, therefore, advise you to first find out what was the cause of the younger sons intellectual disability. You may consult a medical expert(psychiatrist) in any hospital for assessment.