The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Council Members Ritchie Torres, Brad Lander, Antonio Reynoso, Helen Rosenthal, Inez Barron Tenants, and Advocates Stand United against Predatory Equity: Call for responsible disposition of more than 1500 apartments currently in foreclosure.

Council Members Antonio Reynoso and Ritchie Torres with UHAB Executive Director Andrew Reicher. Photo from Council Member Brad Lander.

Council Members Antonio Reynoso and Ritchie Torres with UHAB Executive Director Andrew Reicher. Photo from Council Member Brad Lander.

For Immediate Release: March 18, 2014

City Hall — Elected leaders including City Council members Ritchie Torres, Brad Lander, Antonio Reynoso, Helen Rosenthal, and Inez Barron are joining tenants from 42 affordable buildings spread across Manhattan, Brooklyn, and the Bronx and calling on the mortgage holder and the City to negotiate a deal that would end tenants’ suffering. The rent-regulated and HUD subsidized portfolio, known as the Three Borough Pool, is in foreclosure due to irresponsible financial practices called “predatory equity.” Housing advocates across the city, including Banana Kelly Community Improvement Association, CASA New Settlement Apartments, New York Communities for Change, Northwest Bronx Community and Clergy Coalition, Pratt Area Community Council, Tenants and Neighbors, and the Urban Homesteading Assistance Board are assisting residents in their fight to secure the portfolio as affordable housing.

Predatory equity is a disturbing trend that occurs when investors purchase and grossly over-leverage rent regulated housing with the expectation of huge returns. In order to realize financial gains, property owners attempt to illegally raise rents and reduce maintenance and operating costs. This harmful cycle leads to the displacement of low-income families, deterioration of buildings, and the loss of much needed affordable housing.

Advocates say that the Three Borough Pool is emblematic of the problems of predatory equity. In 2007, a private equity joint venture (Normandy Real Estate, Vantage Properties, Westbrook Partners, and David Kramer) packaged the 42 buildings into one portfolio with a $133 million loan. By 2010 the mortgage (now part of a much larger commercial mortgage backed security) was in default. LNR, the mortgage servicer for the security, began foreclosure proceedings in April of 2013. LNR has given the owners until April 2nd to come up with a refinancing plan that would take the buildings out of foreclosure. However, tenants and advocates hope to use the foreclosure as a juncture to transfer the properties to another owner entirely.

“We’re here today to urge any and all financial institutions not to refinance with David Kramer/Colonial Management, Normandy Real Estate, Vantage Properties and Westbrook Management,” said Benjamin Warren, Tenant Association President of 1511-1521 Sheridan Avenue. “Myself and the other residents of this portfolio know what we deserve, and it is not the carelessness of these self-interested corporations. We look forward to better days without these groups.”

The buildings are physically collapsing under the weight of an enormous mortgage. There are over 2,700 HPD violations in the portfolio. Three of the buildings are in City’s Alternative Enforcement Program, an initiative that targets 200 of the most distressed buildings in the City. Tenants, advocates and elected officials are calling on LNR Property to negotiate with the City and transfer the properties to a responsible developer who will bring the buildings back to safe condition and keep them affordable for the families who call them home.

“These guys took $133 million from the bank and not one dime has gone into taking care of the buildings we live in,” said Debra Cooper, a tenant leader at 711 Fairmount Place. “We live with constant leaks. I regularly don’t have heat or hot water. We have no mail boxes and can’t get our mail. Enough is enough. If David Kramer and his friends aren’t going to take care of our homes, it’s time they are sold to someone who can. It’s past time.”

Some members of the City Council used the situation in the Three Borough Pool to call on the City administration to renew its pledge to fight financial speculation on affordable housing. Elected officials believe that one way to dissuade investors from speculative behavior is through expanding City programs like the Alternative Enforcement Program and the Proactive Preservation Program. These programs allow the City to more closely monitor buildings in physical and/or financial distress. Officials are also considering legislation to create a “watch list” of property owners who engage in predatory equity.

“Affordable housing exists to ease the burden on middle and low income New Yorkers who are looking for a decent standard of living,” said Council Speaker Melissa Mark-Viverito. “This situation highlights the need for further oversight to prevent affordable housing from being undermined by speculative and predatory equity practices in the future.”

“The loss of affordable housing to the practice of predatory equity has created a crisis in our communities that will only become more severe if we fail to take action,” said Councilmember Ritchie Torres, Chair of the Committee on Public Housing. “These properties belong in the hands of new, responsible owners, committed to their preservation and long-term affordability. As a concrete step to address these abuses I have proposed legislation that would create a publically accessible watch list of property owners that engage in this negligent and abusive practice.”

“What these predatory investors are doing is simply unconscionable; everyone in this city deserves a safe, affordable, and well-maintained place to call home,” said Council Member and Bronx delegation leader Annabel Palma. “The administration must take aggressive action against these irresponsible owners and make good on its promise to preserve the city’s affordable housing stock.”

“No one should live in an apartment with mold, water damage or rusted, broken pipes in New York City. It’s time to close the gap between the rights of tenants and obligations of property owners. When homeowners across the country were facing foreclosure because the banking industry had gone rogue, the federal government stepped in to regulate the industry and offer financial assistance through the HAMP modification program. Tenants are no less important than property owners,” said Council Member Mark Levine. “It’s time for the City to step in to empower tenants and to put an end to these abuses. No one’s quality of life should be diminished because of negligent slumlords.”

“Predatory private equity is sucking the life out of our communities, leaving buildings vacant and in decay across New York City. Thousands of long time, hard working residents will be forced from their homes and this is unacceptable,” said Council Member Ydanis Rodriguez. “The city must step in to save these tenants or else this disturbing trend will continue wreaking havoc in our most vulnerable communities. Going forward, the state needs to put safeguards in place to prevent these practices because in every scenario, NYC residents and taxpayers are losing.”

“Today I’m proud to stand with the tenants of the Three Borough Pool. Predatory lending is rooted in disingenuous dealings and tenant harassment, practices that have allowed building owners to shed affordable housing in the race for greater profits, said Council Member Helen Rosenthal. “On the Upper West Side, advocates and tenant leaders have stood firm against speculators like Meyer Orbach whose portfolio includes 25 buildings located between West 106th and West 109th Street. Like the investors behind the Three Borough Pool, The Orbach group has used frivolous litigation and intimidation tactics to push long-term rent regulated tenants from their homes and strip regulated apartments of their affordability through vacancy decontrol. These actions are unconscionable and we must call on every available recourse in our city government to help tenants save their buildings, protect their homes, and preserve their quality of life.”

“Together, we have the opportunity to ensure that over 1,500 families live free from bad conditions, harassment, speculation and fear,” said Sheila Garcia, an organizer at CASA New Settlement Apartments. “Tenants across these buildings want a landlord who will follow the laws and listen to their concerns. Tenants across these buildings have raised families and built communities that we cannot let be destroyed, period, but especially not in the name of speculation.”

“Brooklyn tenants living in HUD subsidized buildings that are part of this foreclosure pool have had enough,” said Jon Furlong, Assistant Organizing Director at the Pratt Area Community Council (PACC). “PACC is proud to stand with the tenants from ALL the affected buildings to ensure they get the repairs and services they deserve. We must continue working together to prevent this type of speculation in multi-family buildings.”

“We’re pleased to see the City Council standing with Three Borough Pool tenants in their fight for a better deal,” said Kerri White, Director of Organizing and Policy at the Urban Homesteading Assistance Board. “However, as a City, we need to figure out ways we can stem speculation on affordable housing in the first place. Tenants shouldn’t have to suffer for years and face foreclosure, waiting for the opportunity to fight for something better.”

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Fight for affordable housing! Fight for a better deal!

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Forty-two buildings spread across the Bronx, Manhattan, and Brooklyn are currently in foreclosure. These buildings, home  to more than 1500 low-income families, are now at risk of being lost to the same speculative financial instruments that led to a massive housing crisis in 2008. Investors continue to gamble on these homes, while 1500 families suffer in hazardous living conditions. 
At this moment in NYC, we cannot afford to lose even one unit of housing for the poor and working class. Let alone more than 1500. That’s why tenants are organizing and fighting back. Join us on Tuesday, March 18th at 11AM on the steps of City Hall to fight back against speculation on affordable housing and for a better deal for tenants!
 
A group of four predatory equity groups (Normandy, Westbrook, Vantage, and Colonial Management) took out a $133 million mortgage in order to buy the portfolio in 2007 during the housing boom. They hoped to cut maintenance costs and force tenants out to raise rents. When people refused to leave their homes, the landlords pocketed the tenants’ rent and let the buildings deteriorate more and more until finally they defaulted on their debt causing all 42 buildings to fall into foreclosure in April 2012.

And that’s just the tip of the iceberg. Tenant have been suffering from neglect and harassment for years. No heat and hot water for days at a time. Elevators that are broken as often as they work. Ceilings that have collapsed or are missing entirely. Repairs that should take hours take months to complete — and then, they are only patchwork. One building hasn’t had gas since August. These conditions are unjust, and tenants are demanding change. 
 
On Tuesday at City Hall, we say enough is enough! We demand safe, permanent, and affordable housing. If Colonial Management won’t take care of these buildings, we demand that the bank sell them to someone who can. 
Will you stand with us on Tuesday morning?
 
For more information, or to let us know you’ll be there, contact Kerri White at 212-479-3358  or at kwhite@uhab.org

Crown Heights Tenants Rally for Affordable Housing

Tenants from 230 and 232 Schenectady Avenue rallied last month against Sanford Solny, a Borough Park based broker who is working with slumlord Bernard Neiderman and his friends to flip their homes for profit.

Solny, Neiderman and their friends will be unsuccessful! For the past two years, tenants have been working with established non-profit housing organization, the Mutual Housing Association of New York, on a deal that will both give tenants a say in how their buildings are managed and keep their rents affordable in perpetuity.

Thanks to JFREJ, NYCC, the Crown Heights Assembly Tenant Union, Take Back the Land, and Brooklyn Legal Services for their continued support!

Cuomo Hands Off! Take Action Now!

New York’s Attorney General Eric Schneiderman has tirelessly gone after the big banks for the reckless financial decisions that sent the country spiraling into a recession and cost tens of thousands of New Yorkers to lose their homes. First a settlement with the mortgage banks came through for $136 million dollars.

Then, a few months ago, JPMorgan Chase agreed to a $13 billion settlement. $613 million of that goes to New York State, and it’s supposed to be used for direct relief to homeowners.

But not if Gov. Cuomo has his way. Instead of helping homeowners, the Governor wants to use that money to pay for a major cut to corporate taxes, including something called The Bank Tax, essentially stealing the settlement money from struggling homeowners and giving it back to Wall Street criminals.

The foreclosure crisis is still devastating our communities and the families and communities hardest hit are exactly the ones from which Gov. Cuomo proposes stealing.

This crises, which has affected almost every neighborhood, has not, however, been spread around evenly. Communities of color lost the most when Chase and other Wall Street bankers pushed us into the Great Recession – the median black household lost almost 84% of its household wealth in the recession. Latinos lost 66%, while white households lost some 34%.

Now Gov. Cuomo wants to keep it that way.

Its time to take action! Sign this petition to tell Cuomo, Hands Off the settlement money!

We have an opportunity to show Cuomo how his constituents feel about diverting much needed money into the hands of Wall Street bankers.

CROWN HEIGHTS TENANTS RALLY AGAINST ATTEMPT TO FLIP ILEGALLY PURCHASED BROOKLYN HOMES

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FOR IMMEDIATE RELEASE Jan. 15, 2014

Contact:

Ismene Speliotis, 718-246-8080 ex 203
Kerri White, 212-479-3371

CROWN HEIGHTS TENANTS RALLY AGAINST ATTEMPT TO FLIP ILLEGALLY PURCHASED BROOKLYN HOMES

BROOKLYN (Jan. 15, 2014) – Residents of two decrepit rent-regulated buildings in Crown Heights and their supporters rallied today to demand that the new owners – who illegally bought the foreclosed-upon homes — stop trying to make a quick buck on the backs of the tenants.

“For the past three years, tenants in all four of these buildings have fought for their homes while suffering unconscionable living conditions,” said Kerri White, Director of Organizing and Policy at the Urban Homesteading Assistance Board, which is helping the tenants, along with New York Communities for Change.

“There is a preservation deal ready to move forward, it has been funded by the city and is supported by the tenant associations. (Broker Sanford) Solny and his investor friends must drop their opposition to the foreclosure immediately. This is a fight they cannot win: their protracted and frankly ridiculous interventions only force tenants to suffer for longer.”

The deteriorating buildings, which have been in foreclosure since 2009, have racked up 319 code violations on just 12 units.   There are holes in walls, water damage and other violations.

The way we are living here, they are treating us like animals,” said Pinkrose James, Tenant Association representative. “If Bernard Neiderman’s friends think they can get our buildings back from the tenants, they are wrong. We are here to demand that the foreclosure move forward so the Mutual Housing Association of New York (MHANY) can begin work on our homes, and to tell let anyone interested in buying these buildings to back off.” 

In March 2012, the Mutual Housing Association of New York (MHANY) purchased the mortgages on the buildings with the intentions of becoming owners once the properties wound their way through the foreclosure process. MHANY bought the mortgages with the support of the tenant associations, housing advocates, and city officials. The 25 year-old non-profit organization has plans that include a complete renovation in the buildings, funded by the Department of Housing Preservation in Development.

However, in the fall of 2012, slumlord Bernard Neiderman illegally sold the deeds to 230 and 232 Schenectady Avenue to a group of investors based in Borough Park. It is illegal to sell buildings that are in foreclosure. These investors, working through broker Sanford Solny, hope they can flip the buildings, buying out MHANY’s interest and making money off the top. This speculative behavior has slowed an already glacial foreclosure process, forcing tenants to wait longer for the repairs they desperately need. The buildings are both in the City’s Alternative Enforcement Program. The tenants rallied outside Solny’s office in Borough Park to demand that these investors drop their baseless and speculative opposition for the foreclosure, and allow the preservation deal to move forward.

“Unfortunately, many neighborhoods that low- and moderate-income New Yorkers have called home for generations have increasingly been affected by the speculative real estate market.  As buildings are sold at speculative prices amongst uncaring and unscrupulous investors — prices that cannot be maintained with the legal residents and legal rents — the greatest victims are the tenants themselves,” said Ismene Speliotis, Executive Director of the Mutual Housing Association of New York.

“MHANY ‘s plan to purchase the note, oversee the completion of the foreclosure, rehabilitate the buildings, and provide decent and affordable housing to the residents is still intact.  We are working with all parties to complete the foreclosure and take care of the residents and the buildings, preserving another affordable housing asset for the Bedford Stuyvesant and Crown Heights community.”

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