The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Tag Archives: Dodd-Frank

It’s Time To Talk about Housing

The broad topic of last night’s debate was “domestic issues,” so if presidential candidates were ever going to engage with one another on housing, last night was the night. But they didn’t. Obama mentioned the word “housing” once last night (it’s on its way back), and Mitt Romney said it twice (government regulations are hurting it; he wants it to come back.) While there was some discussion around financial regulation and Dodd Frank, the word “foreclosure” was not uttered once by either candidate. Neither was Fannie Mae, or Freddie Mac. (You can double check all of this at the Washington Post’s transcript of the debate.)

From this lack of discussion we can conclude one of two things. Either the housing crisis is over, or neither candidate is ready to propose a bold, new idea to reform the housing market and support families facing foreclosure.

It’s definitely the first option. The housing crisis is over! Congratulations everyone.

Just kidding. According to RealtyTrac the number of new foreclosures crept up in August, 2012. And the number of homeowners who have received successful mortgage modifications has decreased significantly since 2010. The housing crisis isn’t over, and judging by the way the candidates seem afraid to come near the issue, we’re not even close.

Jed Kolko of Trulia wrote for Business Insider that the best indication of a housing recovery is a market recovery, and so perhaps by focusing on the economy, the candidates CAN improve housing. Maybe. But housing is also a issue of human rights, and when millions of Americans are on the verge of losing their homes (or have already lost it) it also needs to be addressed as problem of providing shelter and immediate assistance.

As our blog has already noted, a market recovery without real protections from the pre-2008 manic borrowing climate is dangerous and can only be temporary. President Obama seems to believe that Dodd Frank will prevent loan officers from offering faulty products to homeowners who were “borrowing money to pay for homes they couldn’t afford,” and we hope he’s right. But he hasn’t proposed an idea about how to keep homes affordable as a market recovery drives the price of housing up. Neither has his challenger.

We believe housing is a human right, one that is increasingly difficult to secure in this country. Last month, Alen Jenkins at Rooflines published an open letter to the presidential candidates from the Home for Good coalition. It says:

We are calling on our political, business, and civic leaders, including our next president, for bold action to stop needless foreclosures, expand affordable rental housing, and revive a sustainable path to homeownership.

Neither Barack Obama or Mitt Romney were willing or able to offer us that last night.

“Sen. Schumer, Christine Quinn Push Feds To Pressure Bank That Owns Shoddy Housing”: The Village Voice

As published in the The Village Voice by Elizabeth Dwoskin

Image courtesy of The Village Voice

A consequence of our sucky economy: The city estimates that around 125,000 housing units will go into foreclosure over the next two years.

In many cases, owners (including banks) are trying to unload these buildings, and while they wait, living conditions deteriorate drastically for tenants, with landlords racking up housing code violations for lack of heat and hot water, for toxic mold outbreaks, leaky roofs, and rodent infestations.

Conditions have gotten so bad, in some cases, that city officials have taken a lot of flak from advocates (and from journalists), and these buildings have become PR problems for the city. And so, over the past year, officials have been playing a bigger role, by being a middleman between tenants, banks, older landlords and prospective ones.

Today, city and state officials, and Senator Chuck Schumer, took things a step further by asking the federal government to force a big bank that owns many foreclosed and distressed properties to come clean about their finances and sell the properties to a responsible buyer.

New York Community Bank is one of the most active providers of loans to landlords that buy multi-family dwellings in the city. According to the Urban Homesteading Assistance Board, the bank controls the mortgages on 34 foreclosed buildings, which are home to 800 families. 328 buildings that are owned by the bank and home to 6,000 families are in very shaky condition: they have more than three hazardous health and safety violations per apartment. Until recently, the bank owned five properties that were on the city’s worst buildings list.

Last month, Mutual Housing Association of New York, a real estate company that has the support of the city’s housing agency and tenant advocates made a bid to buy the 34 foreclosed properties. According to City Council Speaker Christine Quinn, New York Community Bank turned the company down, saying the offer was too low.

Schumer, along with Quinn and Congresswoman Nydia Velazquez, say that the FDIC — the federal agency that supervises financial institutions — should force New York Community Bank to come clean to buyers about the actual state of the finances, living conditions, and repairs needs of the buildings. Though no one has said it outright, the implication here is that the bank is fudging the numbers to make the distressed buildings more attractive to a higher bidder. The other implication is that the city has not had the pull with the bank that it would have wished.

The New York pols say that what they are asking for is well within the power of the federal agency. Because many of these mortgages were securitized by Wall Street, and are therefore implicated in the wider economic crisis, Schumer and Velazquez had inserted a section into the Dodd-Frank financial reform bill — passed by Congress last summer — that makes the federal government take some responsibility for the problem of distressed mortgages on multi-family dwellings, which afflict big cites like New York.

Schumer said today in a press release: “Here is a perfect example for the FDIC to take into consideration as they help build a framework for this program. The message here should be clear: residents of affordable buildings throughout the City should not be the victims of never-ending cycles of overleveraged gambling by predatory equity investors.”

“Politicians Call on FDIC to Protect Affordable Housing”: Huffington Post

As published in the Huffington Post by Yepoka Yeebo

NEW YORK — City politicians are calling on federal regulators to start making use of a little-known provision in the sweeping financial reform bill passed last year that could help protect housing for low-income residents.

Local politicians, residents and housing activists gathered outside a dilapidated Bronx building Thursday to launch the opening salvo in a battle against New York State’s biggest savings and loan — which, they say, is exacerbating the growing threat to affordable housing in New York City.

Photo courtesy of Huffington Post

New York Community Bank has been accused of trying to profit from the seizure of foreclosed apartment buildings in the area, selling the buildings at prices reminiscent of the height of the housing boom. But property prices have taken a hit, and tenants say conditions at the buildings — run-down even during the market’s flush years — have deteriorated further.

The bank’s representatives did not respond to calls for comment.

Politicians have accused the bank of trying to claw back every penny of the bad mortgages it initiated while the housing bubble inflated, regardless of the consequences.

“Instead of selling them at the price that they’re worth, making it clear that major repairs need to be done, New York Community Bank was only trying to make a quick buck,” New York City Council Speaker Christine Quinn said, adding that regulators like the Federal Deposit Insurance Corporation should examine the “inflated fake numbers faceless, greedy bankers use to make a profit.”

A provision in the Dodd-Frank financial reform bill passed last year calls on federal agencies to protect apartment buildings in foreclosure. Politicians said they are still unsure what form the provision will take, but said the law gave the FDIC the power to intervene in bad deals.

Specifically, Quinn said, the FDIC should force New York Community Bank to disclose its finances and the buildings’ repair costs.

At the height of the financial crisis, roughly 100,000 apartments in low-income neighborhoods in New York were bought by investors who planned to raise the rents or flip the properties, according to affordable housing advocates. Many of the apartment buildings fell into foreclosure, leaving tenants in limbo — a situation politicians tried to address in the financial reform bill.

Long-term residents of the Bronx brought their neighborhoods back from the ruin of the 1970s and 1980s, only to watch speculators and banks make a quick buck then walk away, according to Ruben Diaz Jr, the borough’s president. “It’s downright criminal,” he said. “We’re calling on the FDIC to stop New York Community Bank from profiteering at the expense of Bronxites, all while their buildings fall apart around them.”

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