June 6, 2013 1 Comment
553 E. 169th Street is a 18 unit building located right in the middle of the Bronx. It’s not necessarily easy to recognize — it lacks a building number, and is smashed between another building and a restaurant. But, right now, the building is the source of a tense argument between Valley National Bank and housing advocates, including UHAB.
The property was in foreclosure for many years, and during that time it fell into extreme disrepair. Right now, it’s listed as one of the 200 worst buildings in New York City. We’ve written about the building many times before on The Surreal Estate, and it was also featured in an article on The Atlantic Cities.
More recently, an HPD approved affordable housing developer – one with the skills to stabilize extremely distressed housing at no cost to tenants – put in a bid for the property. Hoping to correct the severe financial distress, the bid requires that bank to swallow a significant loss. Valley National Bank is unsurprisingly reluctant — they did not originate this loan, and they don’t want to pay for another bank’s mistake.
The catch is that Valley National Bank has a loss share agreement with the FDIC. Following the financial crisis, the FDIC compelled VNB to take over Liberty Pointe Bank. In exchange for absorbing Liberty’s bad assets, the FDIC agreed to take on 80% of the losses VNB suffered as a result. The FDIC, a government entity, supposedly answers to tax payers — i.e., tenants. Even though VNB will only be responsible for 20% of the discount given the bank remains reluctant.
Up until this point, Valley National Bank has been open to working with tenants, organizers and advocates at this building. While tenants certainly appreciate this, all the good-faith negotiating that VNB has done up to this point won’t matter very much if 553 E. 169th Street is simply sold to the highest bidder. As they say — the road to hell is paved with good intentions.
Valley National is a small bank, but they still hold $16 billion in assets, have a market value of $1.9 billion, and in 2012 boasted a net income of $143.5 million. $125,000 is a drop of the bucket to the bank, but it will improve the lives of the 18 families who live at 553 E. 169th Street exponentially.
We have been working with elected officials to express to both the bank and the FDIC the importance of not repeating the mistakes of the past by overleveraging this building again. We hope they listen.