The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Tag Archives: NYCB

Innovative First Look Program Sparks Another Exciting Victory for Bronx Tenants!

For over two years, tenants, organizers, advocates and elected officials battled with New York Community Bank, New York’s largest multifamily lender, to determine a path to preservation for the thousands and thousands of units of distressed and at risk affordable housing, damaged by Predatory Equity. The result, as we detailed last summer in “Breaking the Banks,” is a revolutionary “First Look” Program that allows HPD approved landlords a better opportunity to purchase overleveraged and physically damaged affordable housing in foreclosure.  The details of the program were first hammered out between NYCB and advocates, including UHAB, in the Spring 2012, and currently there are at least three participating banks.  

Today, HPD, Speaker Quinn, Workforce Housing Advisors (WFHA), the Community Preservation Corporation (CPC) and UHAB are pleased to announce the beginnings of a gut renovation of some of the the earliest multifamily residential buildings to be transferred to an approved affordable housing developer through the First Look program. WFHA purchased the mortgages at a discount from NYCB in October 2011, and after a comprehensive relocation process (which assured tenants the opportunity to return home following renovation), closed on a $4.7 million financing package.  This package will allow the properties to be fully repaired while also ensuring that they remain affordable for the current residents for years to come.

“The deal is an example of what the City can accomplish when we work together to protect tenants’ homes,” said Speaker Christine C. Quinn. “The ‘First Look’ agreement we reached with New York Community Bank ensures the City and good developers get first crack at purchasing loans and preserving buildings, and I thank Workforce Housing Advisers,  UHAB, and HPD for their hard work to save these homes.”

In her recent State of the City address, Christine Quinn proposed created a housing fund “to make bulk purchases of over leveraged housing. The city will make sure repairs get made while properties make their way through the foreclosure process. Then, we’ll transfer them to an approved developer who will keep the buildings affordable and in good condition.” This proposal is the result of collaboration between the City and housing advocates for the past year. Our idea, which we have called the Interim Facility, will build upon First Look by setting up a framework for large scale preservation of distressed housing.

539-541 E. 147th are the first two buildings in the First Look program to begin the long renovation process, but there are other buildings purchased through the program and are slated for future development. WFHA purchased mortgages in foreclosure from NYCB on 1380 University, also in the Bronx. As recently reported, Banana Kelly and Wavecrest Management also reached a deal on three properties on College Avenue. Tenants in both 1380 University and the College Avenue properties are working closely with CASA (Community Action for Safe Apartments) to ensure that they have a voice in the future of their buildings.

Another exciting victory for the First Look program took place in March 2012 when Mutual Housing Association of NY (MHANY) purchased mortgages from NYCB  on four extremely distressed properties in Brooklyn. These buildings, organized by UHAB, are still winding their way through the foreclosure process. MHANY expects to become the deed holder in the next few months. Once that happens, tenants can look forward to extensive repairs and a cooperative relationship with their non-profit landlord. In the meantime, tenants, UHAB organizers, and MHANY have been meeting regularly with architects to collaborate on a plan for renovation.

The addresses of buildings that have entered the preservation pipeline  through the First Look program thus far are 539-541 E. 147th Street, 1380 University Ave, and 1259, 1265, and 1269 College Avenue in the Bronx, and 230-232 Schenectady Ave, 266 Malcom X Blvd, 896 Madison Street in Brooklyn. Combined, these properties are home to over 250 families. As the Interim Facility gets off the ground and the First Look program continues to grow, we expect this number to multiply!

To read more about the upcoming renovation at E. 147th Street, read today’s press release here.

Time for Receiver Reform

It’s hard to pin down a 100% accurate number of multifamily buildings in New York City in foreclosure. Our system of collecting data is far from perfect, and the status of many of these cases can change overnight. That being said, we estimate that about 400 multifamily buildings fell into foreclosure in the two year period between January 1st, 2010 and December 31st, 2011. (The single family number is far greater. We don’t collect data on that, but The Furman Center is an excellent resource for more information.) This unprecedented level of foreclosure has inevitably led to a tiresome backlog at county Supreme Courts, where foreclosure cases in New York State are all held. Right now, it is not unusual for a foreclosure case to drag out for over two years.

As many of our readers know, court-appointed receivers are supposed to collect rents and make repairs during the foreclosure process. You can read more about the problems tenants experience working with building receivers in our earlier post, “Receiver Reality.” Perhaps because receivers are temporary agents or perhaps because even the best receivers have a limited ability to provide lasting repairs, we have never thrown our weight behind an effort to reform the often corrupt receiver appointment process. But between the increase in the number of foreclosures and the subsequent increase in the length of time of the foreclosure process, the universe of buildings with court-appointed receivers has multiplied in size. We know some tenants who have moved into a building and moved out of it, all during the tenure of a receiver, never knowing a “real” owner. And we’re rethinking our decision to set this issue aside.

Currently, receivers are regulated by court rules 22NYCRR Part 36, which governs all judicial appointments, from building receivers to legal guardians to attorneys for incapacitated persons. Part 36 establishes of a list of qualified applicants for each category of appointment, of which receivers are one. It is under judges’ legal authority to establish education and training requirements for appointments, but this power is not exercised in practice. For building receivers, judges typically only consider issues of compensation and reasons for disqualification (conflicts of interest.) You can read more about Part 36 here and here.

We’re currently working with several of our allies to recommend that judges additionally consider potential receivers’ demonstrated level of competence at managing distressed properties as a requirement for qualification. Because they often manage the most troubled buildings in New York City, possibly for several years at a time, it has become essential that receivers have the skills to at least stabilize buildings while working with tenants in respectful ways. One idea involves recommending that receiver qualifications look similar to HPD’s qualifications to become a 7A administrator. Both officers are temporary appointees that ideally have the capability to stabilize extremely distressed housing.

We are working with allies on formulating a way to approach this issue, but we’re still in the early stages of this process. We remain hopeful: it is in the interest of tenants, advocates and lenders that properties be as best maintained as possible throughout the duration of foreclosure. Some banks have indicated to us that they often request specific receivers who they know will be responsible property managers; tenants can attest to the fact that a good receiver can be an improvement on a bad landlord.  It’s not often that we’re on the same side of the table as lenders. We’re hoping that this unusual collaboration will be helpful in moving this issue forward.

A Tenant’s Perspective on Brooklyn Preservation Victory

Two weeks ago, Crain’s New York Business reported on a breakthrough deal on 4 Bedford-Stuyvesant buildings between MHANY and New York Community Bank, which we hope will fundamentally change how notes in foreclosure are bought and sold in New York City. The article detailed the relationship between housing advocates and NYCB, and the many new tools utilized by MHANY, HPD  and the bank to complete this important deal. One thing missing – something that we believe to be very important – was the tenant’s perspective.

The four buildings in question are 230 and 232 Schenectady, 896 Madison Street, and 266 Malcom X Boulevard. The owner of these four buildings, Bernard Neiderman, is a notorious Brooklyn slumlord. We get out to many buildings in Bed-Stuy and Crown Heights, and tenants know his name. In one horror story, he refused to heat to an entire rent-stabilized building through the winter unless tenants signed leases that illegally raised their rent. Though tenants eventually filed for a rent reduction and won, their case was not honored by Neiderman and has yet to be acknowledged by the receiver who subsequently took over.

Neiderman’s buildings are in foreclosure all over central Brooklyn, and tenants in his buildings have officially and unofficially banded together to swap stories about their old landlord and current receivers.  The receivers vary in quality, but one thing is certain: tenants are thrilled the buildings won’t be going back to Bernard. Last night, a tenant at 896 Madison told me, “I’m glad he lost all his buildings and I hope he’s gone forever.” Like us, they see foreclosure as an opportunity to improve conditions in their buildings and build a relationship with a new, more responsible landlord. The four buildings bought by MHANY (which were in foreclosure with New York Community Bank) can safely say that they have won their fight for a preservation deal. We’re still negotiating with Valley National Bank on three other Neiderman owned foreclosure buildings in the same neighborhoods, and hope that those tenants will have similar success.

Tenants at 230 and 232 Schenectady, 896 Madison, and 266 Malcom X have been through hell. Soon, they’ll be able to say “we’ve been through hell and back again.” But for now, there is still a long road ahead. MHANY (now the lender) has to finish the foreclosure, take title to the buildings, and close on a construction loan from HPD. The group plans to do gut renovations on at least 3 of the properties, which means that tenants and MHANY will have to negotiate relocation agreements.

Tenants are unhappy about moving but overall believe that the temporary discomfort is worth long term affordability and great new apartments. About a year after moving out, they’ll return home to brand new buildings. Rents will remain at or below 30% of their income.  This means that they are now protected from the displacement associated with gentrification that is taking place in Bed-Stuy and Crown Heights, where many of them have lived for over 30 years.  As one woman told me, with joy in her voice, “I’ll come home and then I’ll never leave 230 Schenectady again until the day I die.”

Joseph Ficalora: The Loan Ranger

Yesterday, Crain’s New York Business ran an article on Joseph Ficalora, CEO of New York Community Bank, and on our on-going efforts to get NYCB to do the right thing: sell notes to responsible landlords for a price that reflects actual rents and building conditions.

Aaron Elstein debates the merits of Ficalora and NYCB, offering that he both is praised by investors and those in the industry, but that he has been the victim of a long and bitter fight with activists. Ficalora may have secured solid returns for his investors throughout economic downturn. But at what cost?

At The Surreal Estate, we believe that multi-family buildings are first and foremost homes for the families who live in them. The banking industry is sick; to praise Mr. Ficalora for being the best at banking is like praising Steven J. Baum for being the best at mocking the homeless (see NYTimes “What the Costumes Reveal” 10/28/11). In our opinion, being the best at banking – by the way the banking industry defines the best – is not something one should be proud of. What exactly are we saying about the banking industry if we put Mr. Ficalora on a pedestal?

VIDEO: 1314 Seneca Avenue – Tenants Speak Up!

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