The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Tag Archives: Foreclosure Crisis

Friday News Round-Up

The summer is winding down around here, but tenant meetings and coalitions and actions are ramping up! Stay tuned. And in the meanwhile, here is our Friday News Round-Up!

  1. The housing market is mired in foreclosures and there is really no end in sight. This deep crisis in housing has morphed over the past five years: now many, many homeowners who did NOT sign sneaky loans are ALSO in foreclosure, because they lost their job and are unable to make mortgage payments. The Obama administration bailed out big banks and big car companies but has yet to make a decisive move on the foreclosure front. The New York Times reports on his slow response to the arguable most pressing crisis of our time.
  2. We tell tenants every day that foreclosure is an opportunity to write off a lot of bad debt, kick your slumlord to the curb and bring in a new owner (perhaps even tenants themselves!) with goals of providing safe, affordable living. Other people see foreclosure as an opportunity as wel; — to buy up housing for $300,000 and flip it for $1M with no regard for residents or community well-being. “Investors” or “Entrepreneurs” or Capitalists” or “Bottom-Feeders”…call them what you will. The Atlantic Cities reports on this practice in Pittsburgh’s largest suburb. It’s an interesting read.  
  3. Brian Lehrer was the moderator this week for our third (fourth? fifth?) round of NYCHA vs. NYDN. Arthur Browne calls John Rhea an incompetent banker; John Rhea calls Arthur Browne a liar. Listen to Arthur Browne here and John Rhea here. We don’t know who to believe anymore. But we agree with both men: As national commitment to public housing continues its 30 year decline, NYCHA remains vital to providing affordable housing to 100,000s of New Yorkers and it is a necessary resource that must be preserved. 
  4. The Atlantic Cities has released a graphic that delves into the geography of underwater mortgages. Your shocking piece of information for the day: In a list of 50 large metros in the United States, New York City has one of the lowest percentages of homeowners with negative equity in their property at 20.7%. 20.7% of NYC homeowners are underwater or in foreclosure and that is a national LOW. I don’t know if there is anyone out there who doesn’t believe in the foreclosure crisis but if there is they just got proved wrong.  If this is too depressing, the Atlantic Cities also published an article on the geography of craft beer
  5. As you know, a man who had recently been laid off shot into a rush-hour crowd of people outside of the Empire State Building this morning, killing at least one former coworker. He then was gunned down by the NYPD. I don’t know what is most upsetting about this. The frequency of random, brutal gun violence. The media frenzy reminds us of the violence that happens all over this great city that no one cares to document. The fact that the NYPD may have shot several civilians themselves.  The national undercurrent of anxiety about the state of the economy and job loss that is taking a very real psychological toll.  Our thoughts are with today’s victims, all over New York, all over the country. 

 

Friday News Round-Up!

It’s Friday! You know what to expect:

  1. The New York Daily News continues to lambast NYCHA in the press. But the City Council is fighting back – declaring the campaign against the agency ill-informed and careless. Rosie Mendez and her colleagues in the council have argued that the cash reserves are both smaller than billions NYDN claims, and that they are reserved only for major capital improvements – i.e., using them to fix a leaky faucet would get all the funds revoked by the federal government. All the same, Mayor Bloomberg has announced that the agency will be restructured. NYCHA is the largest public housing authority in North America and is one of the only American housing authorities remaining after many were dismantled in the 1990s and early 2000s. (Politicker, New York Times)
  2. Thousands and thousands of DREAMers showed up at a deferred action event in Chicago this week, the largest crowd in the country. Undocumented people seeking freedom from fear of arrest began to arrive as early as last Tuesday evening. Wednesday was the first day to apply for Obama’s new policy, announced via executive order, that would allow thousands of young immigrants freedom increased access to work permits, study permits, and reprieve from deportation. Ilian Claudio, 19, described the event in Chicago as “A new beginning. A gate is opening.” (Huffington Post)
  3. The foreclosure crisis that continues to ravage the country has had an immense number of negative effects. The number of American’s living in poverty has increased, as well as the number of homeless Americans. High unemployment. Several studies suggest that foreclosure has a negative effect on school performance. Et cetera. But despite anecdotal evidence that suggests crime associated with foreclosure is a national problem, a study in the Social Science Quarterly has found little empirical evidence that the foreclosure crisis has influenced rates of violent and property crime. (The Atlantic Cities)
  4. Evelyn Konrad of Southhampton is fighting against a zoning code change that allows supersized homes in her town. She claims the Mayor is catering favor with his Wall Street buddies, and has already spent nearly $100,000 of her own life savings on the suit. Lone Star Funds CEO Donald Quintin for having a house that is egregiously large. We’re standing with Evelyn! And if Mr. Quintin’s house in the Hamptons is so big, we know about 900 angry tenants who would like to come over for dinner. (The Real Deal)
  5. Two UHAB-monitored co-ops are in the news today for having the two cheapest NYC Real Estate listings of the week. (546 W. 156th Street and 521 W. 151st Street, both in Hamilton Heights.) The good news: at least we’re doing our job of keeping the co-op option affordable. The bad news (or the-news-that-was-left-out): the article in The Real Deal, though it mentions they are “fully renovated co-ops,” does not mention that they are also limited equity, income restricted. Speculators move on! (The Real Deal)

Here are the also-rans for this week’s news roundup: the “public” is clamoring for a picture of Paul Ryan topless (not this public!), Andrew Cuomo has called yet another thing historic (yogurt), and strip clubs in Florida can’t wait for the RNC to arrive. Questionable choices, all around. Have a great weekend, from UHAB Organizing!

What Kind of Recovery Do We Want?

Across the country, crowed homeless shelters and dilapidated neighborhoods are testimony to just how painful years of the foreclosure crisis has been for families. The foreclosure crisis has been as persistent as it has been terrible: At six years, the housing market has been in its longest slide since the Great Depression.  However, in the past couple weeks housing experts have been reporting that the worst may be over. This cautiously optimistic talk of recovery is couched in phrases such as “prices are up,” or “sold for more than asking.”

Before we jump back into the feverish fray of home-buying (and mortgage-signing), it is important to think about what kind of “recovery” there has been so far, and what kind we really want. The foreclosure crisis – as terrible as it has been – has also been an opportunity to reject the practices that brought us to our knees in 2008, and to restart the housing market in a more sustainable, more responsible and more socially just way. Here’s what we’re warning against:

Multifamily Rent-Regulated Housing
Raising rents in the multifamily housing market have led some to believe that the rental market is booming. Demand for housing is high, and in New York City, the apartment vacancy level is very low. At the same time, buildings languish in foreclosure across the Bronx and Brooklyn, leading to condition deterioration and impact tenants’ quality of life. As banks seek to resolve these foreclosures, it is essential that they sell this housing stock at reduced prices that reflect actual conditions in the building. The renewed interest in multifamily housing investment could lead to a second round of Predatory Equity, which would be detrimental for tenants in rent-regulated buildings. In order to have the housing recovery that New York City tenants desperately need, this speculative cycle must be broken! This means that banks must take real rents and housing conditions into account when selling and making new loans.

Single-Family Housing
The past few years have seen an increase in our desire to live in high density neighborhoods, close to mass transit, and in neighborhoods with high walkability scores. This is a progressive step away from what Kaid Benfield of The Atlantic Cities calls the “Ponzi Scheme” of suburban sprawl. As the housing market recovers, there is increased growth on the edges of cities, so as the Wall Street Journal poignantly puts it:  “What’s Next for Housing? More Sprawl.” While the housing market recovers, familiar patterns of suburban growth at the edges of cities will reemerge. This movement away from more sustainable living is bad news for housing activists and for environmentalists alike.

Of course, this isn’t the first time that the media has prematurely heralded in a housing market recovery, so it could be just hot air. If it is true it, however, it’s important to think about the lessons we’ve learned – or should have learned – from the last six years of crisis. Like the fact that rent regulated multifamily housing is not an “under-performing asset.” Apartment buildings have real values that can’t be inflated without deferring services or evicting tenants (i.e. predatory equity). Or the knowledge that irresponsible lending fuels a speculative housing market that can lead to crisis, and that the burden of that crisis falls primarily on low income individuals.

A building in foreclosure is in limbo, between crisis and opportunity. When we organize in these buildings, we tell tenants that it is the optimal time to form a tenants association and demand a say in the kind of housing that they want. That’s why we believe that there is possibility, right now, to reclaim all of this distressed housing – single family and multifamily alike – in a way that preserves affordability and stabilizes neighborhoods.

Many of the buildings that remain in foreclosure in New York City are small and far apart. This represents a massive management and preservation challenge. That’s why the solution is for multifamily and single family housing advocates to work together to development one facility that has the capacity to buy distressed notes in bulk, with the intention of preservation outcomes. This bulk note sale must be done, before private equity groups swoop in and do it first — turning the buildings back into “investments” that don’t have residents’ interest at heart.

What we need is an interim facility.  We need to be able to scoop up the distressed, affordable housing stock, stabilize it, and allow tenants the time and space to make their own choices and have those choices be real options on the table. It’s their home; shouldn’t they be the ones making the decisions?  To learn more about our vision of a NYC interim facility, click here.

California Investors Experiment with Eminent Domain to Solve the Housing Crisis

A few days ago, MSNBC reported on a partnership between Mortgage Resolution Partners (MRP) and several California local governments that would aide in the solution of the persistent housing crisis. San Bernardino and its neighboring cities have set up a joint authority that would use the power of eminent domain to forcibly purchase distressed mortgages. Rather than evict homeowners through foreclosure, the public-private entity would offer residents fresh mortgages with reduced debts. Tom Braithwaite, who also covered this story for The Financial Times writes,

If rolled out nationwide, the biggest losers could be the largest US banks, who hold loans on their books at more than their current face value. People involved with the plan believe it could be disastrous for big mortgage lenders like Bank of America.

MRP is paying for the program by soliciting institutional investors, who will be repaid when local governments re-sell the modified loans to long term lenders. The first targeted group of loans for the program is made up of 5,000 mortgages with debts totaling near $740M. Because they are buying in bulk, we speculate that local governments will likely be able to purchase mortgages for deep discounts that they will then be able to pass on to individual homeowners. This is a creative means of intervening in the foreclosure crisis by allowing a local government to work as an interim note holder (ahem, interim facility) to stabilize financially distressed housing stock.

The program has not yet been given the green light, and there is plenty of reason to suspect it might not get off the ground. Bank of America and other large mortgage lenders are powerful lobbyists. And the use of eminent domain is endlessly controversial in the United States, where we tend to be sensitive to government encroaching on our near-sacred right of property ownership.

But as controversial as it is, the practice of forcibly taking over distressed properties is embedded into the history of New York City affordable housing.  It is through eminent domain law that many cities, including New York, were able to carry out the large scale “slum clearance” programs that characterized urban renewal era housing. It is also is typically used to clear land for large scale public works projects — if you read yesterday’s post, Atlantic Yards and Willet’s Point are both examples of this.

New York City has also directed a takeover of distressed housing without invoking eminent domain law at all, through the Third Party Transfer program. Third Party Transfer allows the city to foreclose on outstanding property taxes and subsequently transfer title of tax delinquent residential properties to responsible developers (or building residents themselves.)

All in all, we believe that there is great opportunity in New York City for a program similar to that being implemented in California. Much of the infrastructure is already in place, including the quasi-public non-profit Neighborhood Restore that administers TPT and would be a logical body to run a mortgage program such as this.  Of course, it would look different in our world: mortgage modifications would be intended for new, responsible developers rather than the original owners. But the California model is an exciting idea that could potentially stabilize massive amounts of housing stock for struggling homeowners. We’re excited to watch it play out – and, hopefully, to bring something similar here.

New York City: Affordable Housing and Cultural Epicenter

Photo via QMA “Red-Lines” exhibition, 2009.

New York City is chock full of museums. Chock full of museums featuring exhibits that draw directly from the financial crisis and how it has affected affordable housing across the country.  Here are five of our favorites. If you know of any others, please add on to the list! We’d love tips.

  1. Foreclosed: Documents from the American Housing Crisis
    The Alice Austen House Museum on Staten Island is currently displaying photographs that highlight the on-going foreclosure crisis. Though it primarily focuses on the single-family world, it highlights the widespread eviction and housing deterioration that has taken place since 2008. The exhibit closes in a couple days, so be sure to hop on that free ferry right away!
  2. Activist New York
    The Museum of the City of New York’s exhibition Activist New York is the inaugural exhibition in the new Puffin Foundation Gallery, which is dedicated to celebrating the ways in which New Yorkers have banded together to exercise their power to shape their city. New York City’s vibrant activist history has been shaped significantly by the decades-long fight to preserve affordable housing. We love this for obvious reasons.
  3. Re-Housing the American Dream
    The Museum of Modern Art’s current exhibition on the five neighborhoods most impacted by the foreclosure crisis is presented in conjunction with Columbia Urban Planning students. Students worked together with planning experts (architects, affordable housing practitioners, community lenders, etc) to design innovative solutions for struggling neighborhoods. One of their solutions looks quite a bit like an interim facility
  4. Tracking the Credit Crisis
    The Museum of American Finance is located on Wall Street, in the belly of the beast. This exhibit, Tracking the Credit Crisis, follows the origins of the financial meltdown in 2008 and what has since been done to combat it, including the bank bailout and Obama’s stimulus package. Though this is not explicitly linked to New York City housing, the credit crisis is deeply entwined in the work that we do, as it has its base in the irresponsible lending and systematic overleveraging that have decimated housing stock across the country. Check it out.
  5. Housing is a Human Right
    Housing is a Human Right is an on-going portrait to document the struggle for home. Much of their work is a story-telling project displayed on their website, but they also put up temporary exhibitions in unconventional locations, like storage pods or laundromats. This project specifically focuses on the individuals who are dealing with the ramifications of the foreclosure crisis, on the ground. They also aim to inspire grassroots housing activism across the country.

These five projects are really just the tip of the iceberg. Anyone interested in the history of housing in New York City should visit the Lower East Side Tenement Museum, which celebrates New York City’s immigrant history with a display of an early immigrant home. We love the Studio Museum in Harlem, El Museo del Barrio, the Queens Museum, and the Brooklyn Museum, because these are all community centered institutions that draw deeply from the neighborhoods in which they are based. We believe that housing and community are tightly linked, and that we have a lot to learn about what kind of housing we need by learning about the communities we aim to serve.

Finally, this post is primarily about current exhibitions, but we’re endlessly saddened that the Red Line Housing Crisis Learning Center, presented in collaboration between the QMA and the Center for Urban Pedagogy, is not a permanent exhibition. In the midst of the Subprime Meltdown, artist and graphic designed Damon Rich created works to enrich the “urgent conversation about how our society finances its living environments.” Though the exhibit is gone, you can check out pictures from our favorite part at the Queens Museum’s Flickr. In these pictures, the artist displayed every building in foreclosure at that time on the Panorama of the City of New York. This amazing visual tool really drove home the impact that foreclosure had on New York City in 2009. It’d be incredible to see it today.

Edit: June 28th, 2012. We’ve just learned about The Museum of Reclaimed Urban Space, a history museum of local grassroots activism at 155 Avenue C between 9th and 10th Street. Set to open at the end of July, this new museum will host several different types of tours which aim to celebrate this history of squatting and the history of community gardens in New York City’s Lower East Side. The museum will display photographs of old squats during all stages of renovations as well as vacant, rubble-strewn lots and their transformation into vibrant community gardens. There will also be video screenings in the museum detailing community efforts to transform spaces in the Lower East Side into the artistic and deeply historic neighborhood that it is today. Be sure to pass by and experience this rich history of the city!

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