Tag Archives: Lone Star

by | March 13, 2013 · 10:30 am

Organized Tenants Meet with Alma Realty Corp

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Hilda Davis of 9 Thayer Street tells Nick Conway of Alma Realty Corp about her concerns in the building

Last week, a large group of organized tenant associations in the Vantage/Lone Star buildings met with their new landlord, Alma Realty Corp, for the first time. (With both Vantage and Lone Star out of the picture, I guess the tenant associations will have to decide whether they want to rename the coalition!) Alma Realty Corp is a large scale New York City area landlord, and this is not the first time they’ve purchased buildings in foreclosure from Vantage Properties. They came to last week’s meeting hoping to impress upon tenants that, despite their similar address (Vantage and Alma operate out of the same office building in Long Island City, on different floors), they are NOT Vantage and they are not the same kind of landlord. Vantage’s bad blood with New York City tenants and elected officials is well known, and Alma made it clear that they will not be repeating Vantage’s policies of harassing and illegally evicting tenants with the intention of increasing revenue.

The meeting was a major victory for tenant associations who have been fighting for years for a healthy relationship with their landlord.  We believe that Alma presented themselves as willing to work with tenants- even offering up their cellphone numbers- because for the past year, tenants have demonstrated their power through organizing, emphasizing that “We Don’t Want Another Vantage.”  As a result of tenants’ hard work engaging elected officials, talking to press, protesting outside Lone Star’s office, and regularly meeting as tenant associations, Alma appears to be willing and ready to work with tenants, and allow tenants to have a say in how their building functions. 

During the meeting, tenants had the opportunity to ask burning questions for their new landlord.  Representatives from Alma also had the chance to present their plans for the building, and their policies for working with tenants.  In addition to behaving better than Vantage once did, Alma made a host of promises to the gathered tenants, including:

  • No MCIs in the foreseeable future
  • Increased security, including a better door, working intercoms, and keys for every member of the household
  • Maintenance to the roof (to prevent future leaks)
  • No immediate evictions resulting from the confusion of taking over the building from Barberry Rose Management — tenants will have opportunity to meet and discuss with Alma any outstanding rental concerns
  • Availability to meet with tenants, at the office or at the building, at tenants’ requests
  • Posting correct contact information in the hallways
  • Supplying all tenants with rent statements and return envelopes, enclosed in envelopes
  • Provide tenants in each building with their plans for repairs/work going forward

Tenant leaders are hopeful about their relationship with Alma, though they intend to stay vigilant.  After all, words are just words and we hope to see Alma back up what they promised with real action. As we move into the next few months, we hope that Alma will continue meeting with tenant associations, and demonstrating their commitment to being good, responsible landlords for the current residents of the buildings.

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by | December 10, 2012 · 11:39 am

Press Release: FRUSTRATED TENANTS HOLD BANK AND PREDATORY LOAN SERVICER RESPONSIBLE FOR DEPLORABLE CONDITIONS

Monday, December 10th, 2012, Brooklyn, NY—Tenants at 1507 St. Johns Place, represented by South Brooklyn Legal Services and Bedford-Stuyvesant Community Legal Services (programs of Legal Services NYC) have filed a motion demanding that Wells Fargo and its servicer Lone Star Funds advance the funds necessary to repair deplorable conditions in their building. The property, in foreclosure since 2010, has a current total of 105 city code violations on 21 units, leaving the frustrated tenants no choice but to ask the court to intervene on their behalf.

The rent-regulated building, home to nearly twenty low-income families, was purchased by S&Z Capital and Development in May 2006. S&Z has a history of mismanagement throughout Brooklyn and has lost several of its buildings through foreclosure—a pattern that was repeated at the St. Johns property when Citibank began foreclosure proceedings in March 2010. Lone Star Capital, a private-equity investment group based in Texas, purchased the delinquent mortgage in January 2011. Lone Star sold the note to Wells Fargo a short time later, but continues to service the mortgage and has taken over the foreclosure case.

Lone Star drew recent local scrutiny following their purchase of several distressed mortgages portfolios in Manhattan, when it was accused by tenants, elected officials and HPD of attempting to profit from a speculative sale of the properties. Although Lone Star has not yet attempted to sell the St. Johns property, conditions have seriously declined since the firm took over the mortgage—leaving the tenants to deal with pervasive mold, leaks, peeling paint, falling and cracked ceilings and inconsistent hot water. Some tenants are even experiencing health issues as a result of dangerous conditions in their apartments. With this legal motion, the tenants are demanding that Lone Star advance the funds necessary to repair these hazardous defects.

“Shelter is a basic human right that many New Yorkers have too often been denied. The tenants of 1507 St. Johns Place deserve to live and raise their families in a safe environment,” said Representative Yvette D. Clarke. “I wholeheartedly support these tenants in their fight to improve the conditions in their building and preserve affordability. We cannot allow these housing units in Brooklyn to be lost to speculative investment schemes that drive tenants out of their homes.”

“It is important that Lone Star be held accountable and take full responsibility for the deplorable living conditions under which these 20 families live on a daily basis,” said State Senator Eric Adams. “The irresponsible mismanagement of 1507 St. John’s Place is a clear reflection of Lone Star’s disregard for its tenants and the community at large. We will not tolerate exploitation by investors whose only concern is their profit margin!”

“Lone Star must bring relief to tenants and immediately release funds to make much needed repairs in this building,” said City Council Speaker Christine C. Quinn. “The courts have confirmed that lenders can be held responsible for conditions at buildings like these, but Lone Star shouldn’t wait for tenants to file actions or judges to make decisions. They should fix the building now.”

“Our clients are living in squalor because of the outrageous investment schemes of Lone Star Funds and Wells Fargo,” said Rachel Hannaford, Staff Attorney at South Brooklyn Legal Services. “Many tenants have been living in the building for decades and have never witnessed such unhealthy and unsanitary conditions. Tenants have developed rashes because of pervasive mold and have to contend with intermittent heat and hot water. Repairs are simply not being done. We have filed this motion so that the Court understands the seriousness of the situation and exercises its power to ensure that the tenants do not suffer at the hands of irresponsible and callous speculators.”

“Lone Star has made a practice of purchasing debt some of New York City’s most vulnerable buildings because they, like other investors before them, feel they can make a profit off of exploiting affordable housing” said Kerri White, Co-Director at the Urban Homesteading Assistance Board. “This business plan is destined for failure as recent history has already taught us. Lone Star must take responsibility for the deteriorating conditions tenants face under their control as well as the impact their financial decisions have on the residents and communities where these buildings reside.”

Contact: Rachel Hannaford, 718-237-5513 Kerri White, 520-507-5863

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by | June 15, 2012 · 3:22 pm

Friday News Roundup

Happy Friday, from UHAB Organizers. It was an eventful week for us, with tenant meetings at two of the Vantage buildings in foreclosure and a couple other buildings in foreclosure with Flushing Savings Bank in Brooklyn. Thanks to Councilmember Ydanis Rodriguez and Speaker Christine Quinn for their support at meetings this week.

Today we’re giving you something of a “news roundup.” Things that happened this week that we liked, things that made us angry, and some things we just found interesting. Enjoy!

  1. The New York Times released a short documentary, “The Scars of Stop-and-Frisk,” that focuses Tyquen Brehon of Brooklyn, who relates his experiences of being stopped more than 60 times before the age of 18. The film is interwoven with facts and figures about the controversial stop-and-frisk program. This is the perfect documentary to watch to get you fired up for Sunday’s march against the controversial program. The march will begin at 3 p.m. on Sunday, June 17 at 110th Street between 5th Avenue and Lenox Avenue, and from there will travel south to 5th and 79th.
  2. In Brooklyn, a landlord was charged with manslaughter in the deaths of five tenants due to fire. Though the building was set aflame as a result of arson, courts determined the landlord shared responsibility in the deaths because “he owned, maintained and made money from a building with illegal subdivisions that blocked tenants’ ability to escape in a deadly fire.”
  3. There are about 1,000 articles on the web right now about President Obama’s announcement on immigration policy, which allows young undocumented people with no criminal record to be eligible for deferred action and potentially work visas. This is a big step forward in terms of creating opportunities for undocumented people and allowing migrants to live with freedom from fear. We still have a long way to go. You can read the press release from the White House at CNN.
  4. This week, Nona Willis Aronowitz published “How the Recession Made Me a Gentrifier in My Home Town” at The Atlantic Cities. Her article is a somewhat personal piece about growing up in Park Slope and Greenwich Village and being pushed out of those neighborhoods to where she now lives, in Harlem, as a white woman. She writes, “Am I a gentrifier of Harlem if it’s one of the few New York neighborhoods I can afford? It’s not as if I can move back to my old stomping grounds, now populated by six- and seven-figure earners. Yet in my current location, I’m still pushing out even lower-income residents.”
  5. Word-Up Bookstore in Washington Heights is seeking $10G in the next 10 days (now 5 days!) in order to keep its doors open, the New York Daily News reports. We discovered this great community bookstore while surveying the Vantage/Lone-Star buildings in foreclosure. Until earlier this year, Word-Up enjoyed the generosity of their landlord, a major benefactor to the project who allowed them to stay in their storefront rent free for an extended period of time. (That period of time is now over.) Their landlord is Vantage Properties. To us, their sponsorship is disingenuous – an halfhearted jab a catering favor with communities they have consistently attempted to displace. But, it seems clear that without Vantage, Word-Up would have shuttered their doors long ago. This story, like Tahl-Propp for Kids, is symbolic of the ways that lines are easily blurred in large scale community development. Or it’s symbolic of the ways in which bad landlords attempt to manipulate communities into welcoming them in. Your choice. In the end, does this excuse their behavior towards their residents? We don’t think so.

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by | May 2, 2012 · 4:45 pm

The Real Deal: “Multi-billion dollar private-equity fund targets local appraisers in lawsuits”

Yesterday, the Real Deal published an article reporting that Lone Star, a Texas-based Private Equity group, is suing local New York appraisers. We are familiar with Lone Star as a lender on a number of large, Predatory Equity portfolios we have been tracking for many years. Now, Lone Star is arguing that during the housing boom, appraisers acted “fraudulently and negligently” when valuing properties, and as a result Lone Star mis-lent.

As we have previously asserted on this blog, we believe that banks have a pivotal role to play in breaking the cycle of Predatory Equity. Despite how we may sometimes feel, banks do not arbitrarily set a price for their distressed assets, nor do they arbitrarily decide how much they are willing to lend on a property.  As we understand it, third party building appraisers are hired by banks to determine the real value of a particular asset, and lending levels are supposed to reflect this value. It’s interesting that a major Predatory Equity lender is suing real estate appraisers for property evaluations during the housing boom. Though we are not appraisal experts, we certainly have a few thoughts.

  • According to at least one bank we work with, appraisers are not taking building conditions into account when determining value of a property. This is a huge problem.  How can buildings be bought and sold for the right price if the repair needs – potentially millions of dollars — are ignored?  To us, it’s a no-brainer that the cost to stabilize a distressed property must be taken out of the total value when determining the cost of acquisition. Otherwise, the building is doomed for shoddy repairs and another round of neglect.

Another aspect of this article which is particularly strange is that Lone Star is the group driving these cases. We haven’t seen specific examples, but would likely agree with them that pre-2008 home values were highly inflated.  However, it’s odd for us to uncritically side ourselves with a Predatory Equity company, so we have some follow-up thoughts:

  • The article quotes Matthew Parrott, an independent attorney. He says “the cases appear to be a way for Lone Star to generate revenue from distressed loans.”  We don’t fully understand how this works. Has Lone Star determined that they paid too much for a distressed asset, and are now trying to sue other parties to recoup their losses?
  • Banks hire independent appraisers but those appraisers do not hold a guns to banks’ heads commanding them to lend at a particular level. We believe that the lenders’ eagerness to maximize profit encouraged them to believe the perhaps-inflated appraisals. Lone Star still made the loan. It seems that Lone Star is attempting to place blame for their own mistakes on other parties.

The question of appraisal seems to be linked to how much faith one puts in the free market: do you believe that the value of an asset is what someone will pay for it? Or is the value linked to the actual income potential (in NYC: regulated rents) and conditions (cost of repair)? We certainly believe that it is the latter.  Any bank making loans should hire appraisers that know building details like rent roll, and have been inside of apartments,  and have checked out the boiler, the roof, and other systems.

We leave you with one last question: what would it take to reform the way that appraisers value buildings? We intend to continue to thinking about this issue, and flush out potential answers to that question. Stay tuned!

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