The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Tag Archives: foreclosure

Documentary Release: “Faile St: The Human Cost of Foreclosure”

We are excited to announce the release of a powerful documentary by Elaisha Stokes and John Light highlighting UHAB’s Organizing and Policy Department’s work in the Bronx. The documentary highlights two buildings, 836 Faile Street and 553 E. 169th Street, both in the Bronx. UHAB has been organizing and working with tenant associations for a preservation outcome in these properties since 2011. At the making of the documentary, both buildings were in foreclosure, trapped in the cycle of predatory equity, and tenants were living in deplorable conditions.

Almost 2 years later, tenants at 553 E. 169th St. have a new landlord. 836 Faile St., however, remains in foreclosure with private equity company, Stabilis Capital Management as mortgage holder.  Tenants at Faile St. continue to organize, and are demanding that Stabilis transfer their building to Community Development Inc., a city-approved preservation developer.  They are are being supported by Bronx Legal Services, who will soon be filing a motion to enter tenants into the foreclosure case, and their Councilwoman Maria del Carmen Arroyo. Recently, UHAB has begun to build tenant associations in 7 other Stabilis-related buildings. 836 Faile Street tenants are working with tenants across New York City to demand that Stabilis Capital get out of the rent regulated multifamily housing business. 

Click here to watch the Earth Focus documentary about how tenants can come together to fight for quality affordable housing, and stay tuned to this exciting fight.

Predatory Equity fails again…and no one is surprised.

Today the Wall Street Journal published an article about yet another Predatory Equity deal that has fallen into foreclosure. This huge 42 building portfolio of affordable housing spread over the Bronx, Brooklyn and Manhattan is known as the Three Borough Pool. UHAB along with out allies have been expressing concern for these buildings for years. We began organizing

The portfolio is a classic Predatory Equity deal: a group of well known private equity groups including Normandy Real Estate, Vantage Properties, Westbrook Management and David Kramer, purchased the properties with an inflated mortgage from Wachovia Bank, who quickly sold the debt into a commercial mortgage backed security. Several of the owners are now notorious in NYC for tenant harassment in other properties. According to Normandy’s website their business strategy is to “target value-add and distressed asset and debt opportunities in high-quality locations… We identify assets that are underutilized, have operational inefficiencies, or have below-market rents.

“Under-utilized assets” is landlord-speak for “home to low income families who we think can easily be evicted.” This was certainly their plan in the Three Borough portfolio. As with most Predatory Equity deals, the tenants began facing harassment and building conditions began to decline. Rents continued to rise, leases citing MCI increases on elevators that continued to break down and roofs with reoccurring leaks. Default rumors began spreading as early as 2010, and when the mortgage became due in full in 2012, LNR partners stepped in as special servicer for the CMBS to deal with the fall out.

UHAB began organizing some of the buildings in 2009, and CASA has had an established tenant association in one of the largest buildings in the portfolio for many years. According to security documents, the buildings were 94% occupied at the time of purchase. And tenants did not bend to their landlord’s harassment tactics — they refused to be displaced — directly leading to the portfolio’s failure.

UHAB is working with organizers from CASA, New York Communities for Change, Mothers on the Move, Banana Kelly and PACC to engage tenants across the portfolio.  Our efforts have been met with extreme harassment from Colonial Management, who manages the entire portfolio. David Kramer, one of the owners in the deal, is a partner at Colonial Management. Supers and property managers have attempted to lie to tenants about meetings being cancelled, tried to impede on tenants rights to have a meeting in the lobby and have even out-right lied by passing out flyers that denied the buildings are in foreclosure:

Colonial notice not in foreclosure

This only intensifies the frustrations of tenants who have been suffering from problems with management for some time.  Neglect of the buildings have caused serious problems for the families who live in them.  Conditions like mold, leaks and vermin are not uncommon in the buildings. The WSJ article published a map along side the article which highlighted the code violations across the properties:

WSJ Violation Map

The WSJ article also mentions a possible deal on the table to end the foreclosure, although their source is anonymous. Considering that the portfolio has been in default for almost three years, we happen to think that any investor would be mad to refinance this portfolio without a significant mortgage write down. Ultimately, this is what the tenants need. Any refinancing should not be negotiated behind closed doors with sources that refuse to be named in the press. Tenants deserve (and demand) a voice at the negotiating table.

LNR Partners’ decision on how to deal with this portfolio will affect over 1,500 families. Working with tenants, they could transfer the buildings to a housing developer who will work alongside residents to respect their rights, ensure good repairs, and keep the buildings affordable. However, LNR could also work with the current management and transfer our buildings to another speculator with the same, unsustainable mortgage. This would cause tenants to live through another round of harassment and neglect. Tenants are joining together to fight LNR and Colonial Management because they have no other choice: the buildings are an important source of affordable housing, and losing these 1500 units to another speculator would be devastating for New York City. Join UHAB and our allies in standing with the tenants of the Three Borough Pool and demanding a better deal! 

Speculator today, slumlord… today?

broken stairs 10.7.13 now fixed

After two years of tenant organizing, not that much shocks me anymore.  I’ve seen holes in ceilings, mold covering bedroom walls, and families living without basic amenities like fridges or stoves.  But walking into 755 Jackson Avenue in the Bronx was a shock.

A quick rundown: The building has 11 units and 215 code violations. It’s in HPD’s Alternative Enforcement Program, and on the Bill de Blasio’s Worst Landlord List.  The building has asbestos, lead paint, mold, leaks, and two tenants were injured on a collapsed staircase (pictured above).

And if that’s not enough, it’s owned by the one and only Stabilis Capital Management.  (In case you forgot, Stabilis is the lender on 836 Faile Street and six buildings in Ridgewood, all of which are in foreclosure and in deplorable condition.)

Wait! Stop the presses!  Stabilis owns buildings?  That was our question, too, given that we’ve only ever seen them acting as a mortgage holder interested in flipping debt.

That probably was their plan here as well, but things went wrong: Stabilis bought the debt at 755 Jackson Ave while the building was in foreclosure.  When the building went to auction, we assume no one bid and Stabilis took the title by default. It seems like it was all a big mistake. With a lot of consequences.

While Stabilis became owner in June, they have done nothing to step forward and claim responsibility for the building.  This has left tenants in a position where they don’t know who to call in an emergency or who to pay rent to. It leaves the City responsible for repairs. The building is effectively abandoned.

We’re now organizing at Jackson Avenue and tenants are planning to push Stabilis out of their building. And now that we know how Stabilis treats the buildings they own, we’re doubly fired up to fight against them at Faile Street and in Ridgewood, Queens.

Tenants, elected officials, and advocates are demanding that Stabilis find a responsible way to dispose of this property, and the other distressed multifamily buildings in their portfolio.  Check out Councilmember Maria del Carmen Arroyo’s letter to Stabilis Capital here, and stay tuned to our campaign!!

Fighting for the Future: Lessons from 1520 Sedgwick

This is a video from a few days ago when we celebrated the return of 1520 Sedgwick to well-maintained affordable housing for low to moderate income residents in the Bronx. This was the culmination of a long, hard-fought campaign started by the tenants with the assistance of UHAB in 2007.

I wasn’t the organizer in the 1520 Sedgwick campaign, since I joined UHAB in 2008. But because of the importance of the campaign my formation as a tenant organizer was shaped through the lens of 1520 Sedgwick.

In 2007, residents of 1520 Sedgwick reached out to UHAB and Tenants & Neighbors because they had learned that their building had been sold to a landlord who intended to remove affordability restrictions and attract higher paying tenants to make up for the fact that he over paid for the building in the first place.

Sedgwick was the iconic predatory equity campaign: strong tenants stood up to fight for their homes in a historic building known as the “Birthplace of Hip-Hop.”   Tenants, with UHAB’s support, began pushing back against their landlord. Our earliest campaign goals at 1520 Sedgwick were to keep the buildings in the Mitchell Lama program and prevent a sale to real estate speculator Mark Karasick. Help came flooding in, starting with DJ Kool Herc, the father of hip-hop who started the cultural trend in the community room of 1520 forty years ago, but soon city leaders like Senator Schumer and Congressman Serrano, to name a few, joined the fight.

It was an emotional and impressive campaign. And, despite everyone’s best efforts, we failed. Big business profiteering off affordable housing won the fight. The building was sold to Mark Karasick, who bought it with a $7.2 million mortgage from Sovereign Bank, shortly thereafter it was removed from the Mitchel Lama program. Predictably, the building began to fall in to disrepair. However, rather than becoming discouraged, the tenants remained organized and continued to fight for what they knew their buildings could be.

That’s when Workforce Housing Advisors entered the scene, with an unconventional plan to purchase the mortgage and foreclosure on the owner. The tenants were ready to pick up the fight once again, and the second time around it was not difficult to find the support of city agencies and elected officials to help with this preservation option, and the building was recovered.

This recent celebration was the official ribbon cutting, post renovation of the building. The tenants and all their supporters who helped win this campaign came out to see what all the work was for, a beautiful affordable housing complex for the residents who fought so hard for their community.

While we are grateful for the support from all the organizations and agencies, we need to take a moment and specifically thank the tenants. Their struggle and their victory has taught UHAB’s Organizing and Policy Department so much over the past five years. When they reached out to us in 2007, we were in the early stages of predatory equity and were just discovering how financial malfeasance and mortgage over-leveraging based on speculation and gentrification, impacts tenants and their homes. Now, it defines our work. We learned about foreclosure at 1520 Sedgwick; Workforce Housing’s plan to purchase the mortgage and foreclose on the owner provided the inspiration for our campaign against New York Community Bank and created the framework for the First Look Program that came out of it.

Currently, while we continue to face the fallout of the previous housing bust, at the same time we see buildings being re-overleveraged. It’s disheartening to feel that real estate hasn’t learned from the failures of speculators like Karasic. Still, I look at the 1520 Sedgwick campaign and remember the resiliency of the tenants, their refusal to give up, and it reminds me that while it’s easy to be discouraged, the present isn’t permanent and the future is worth fighting for.

Right to Rent!

for rent

Last week, the New York Times published an article with the headline: “As Renters Move In, Some Homeowners Fret.” The 1,300 word piece very nearly blames renters for most neighborhood/community problems, while letting big banks and investment companies entirely off the hook. “The decline in homeownership is also changing many neighborhoods in profound ways,” the article says, “including reduced home values, lower voter turnout and political influence, less social stability, and higher crime.”

Okay, correlation does not equal causation; there are many, many other factors that could contribute to neighborhood destabilization, like widespread unemployment, stagnant wages, an ongoing foreclosure plague, and deepening inequality, to name just a few. But the NY Times not-so-subtly paints renters as drug dealers, pimps, meth addicts, and violent criminals:

A neighbor, a renter, left a dog chained to a stop sign in the heat. She was already in trouble, he said, for breaking into an empty house on the block. Another neighborhood resident mentioned a couple meth houses and one that had been used as a brothel. All were rentals.

As Emily Badger notes in a response to this same NY Times article at The Atlantic Cities: “As long as we’re constructing trends with random examples, I’d like to counter that I know a lot of renters, and none of them are prostitutes, murders, or dog abusers.”

To be fair, on the last page the author mentions one “good renter”; the quality that makes him a good renter is that he hates other renters also, and would rather be a homeowner.

In general, America hates renters. Or rather, America loves home-ownership and doesn’t trust people who rent as a result. From America’s very earliest years as a country the right to participate in civil society has been closely tied to property ownership. This thread of home-ownership as paramount to personhood has been woven through all eras of United States history, from the Industrial Revolution to post WWII suburbanization to the Civil Rights era, up to the massive housing boom of the early 2000s. And then, up to the housing crash in 2007.

Many describe home-ownership as an expression of a national character based on individualism and self-sufficiency: the “American Dream.” But another explanation is that the drive for home-ownership is one that has been both created and marketed successfully by a powerful coalition of capitalist interests. As Laura Gottesdiener summarizes in “A Dream Foreclosed: Black America and the Fight for A Place to Call Home:”

As early as the 1930s, a coalition of industries – including real estate, insurance, timber, manufacturing, auto, oil, and finance – coalesced into a powerful lobbying force. Its goal: the expansion of a homeownership-based private housing industry…The government helped ideologically. For example, Herbert Hoover partnered with the real estate industry’s lobbyist to create a pro-homeownership advertising “nonprofit,” Better Homes America, Inc., that marketed the home as the symbol of the American dream.

The largest industries and the federal government continued to aggressively push home-ownership through the mid-2000s, and everybody knows the result: tens of millions of Americans have been evicted from their homes through foreclosure. The crisis isn’t over yet. According to the Furman Center for Real Estate and Urban Policy, in New York City 12,850 foreclosures commenced in 2012, a 5.3% increase from 2011.

As organizers, we’ve fought alongside residents against displacement, predatory lending, and foreclosure since 2008. We don’t believe that renting is inherently bad, and it may make sense for many people. Moreover, as New Yorkers, we know another world is possible: one in which many people are renters, tenants are seen as essentially equal to homeowners, and the problems of tenants actually matter to elected officials. As polemical as it sounds, after the past 5 years it’s a lot easier to believe that home-ownership is a scheme designed to hurt working people of color than it is to believe that renters are a pox on society, predestined to undermine community and neighborhood stability.

The pervasive home-ownership ideology pits owners against renters and is one of many things that prevents working and middle class people from joining together to dismantle a highly unequal system. Many people become homeowners because they are seeking freedom from landlords and control over their housing. And who could really blame them, given the landlords that exist in this city? But when people are unfairly saddled with mortgage debt far larger than what their home is worth, is that really free?* To borrow from David Graeber, who is writing about the attack on organized labor but I think the sentiment applies to housing as well:

Even more perverse, there seems to be a broad sense that this is the way things should be. This is one of the secret strengths of right-wing populism. You can see it when tabloids whip up resentment against tube workers for paralysing London during contract disputes: the very fact that tube workers can paralyse London shows that their work is actually necessary, but this seems to be precisely what annoys people. It’s even clearer in the US, where Republicans have had remarkable success mobilizing resentment against school teachers, or auto workers (and not, significantly, against the school administrators or auto industry managers who actually cause the problems) for their supposedly bloated wages and benefits.

Even more perverse, there seems to be a broad sense that this is the way things should be. You can see it when the New York Times whips up resentment against renters for destabilizing neighborhoods during a mass foreclosure crisis.

*This article doesn’t touch on the immense psychological warfare that has surely taken place when dream = home-ownership = subprime mortgage fraud = foreclosure = eviction = theft of dream. For more on that, be sure to read A Dream Foreclosed.

N.B. We don’t think all forms of ownership are bad. In fact, we very strongly believe in collective ownership, limited equity cooperatives, and mutual housing. More on those models, which protect community interests over Wall Street, give residents control in decision-making in their homes, and maintain long term affordable housing, at another time.

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