Gotham Gazette: “Council Acts on Foreclosures”

First your heat is turned off. Then the leaks start. Mold is growing and harmful lead paint begins to peel. Countless calls to the landlord go unreturned, because the management stopped paying bills months ago — the building is facing foreclosure and soon, an even-more anonymous bank will own the building.

With hundreds of residential building facing foreclosures each year, these conditions are not uncommon; they are also exactly what a new City Council bill hopes to prevent.

The bill, 501-A, will require banks to notify the Department of Housing Preservation and Development (HPD) fifteen days before a foreclosure action is taken on a residential building. This will allow the HPD to help keep buildings up to code and ensure the building’s sale to new, responsible buyers.

The bill will press banks to take more responsibility for the fact that the assets they seize still have tenants living in them, Quinn said; “you lent the money, you own the building.”

Keeping the Roaches Out

In addition to deteriorating physical conditions, distressed buildings are particularly susceptible to corrupt buyers and illegal conversions (as buyers convert units to boarding houses to raise cash fast).

With a nod to the New York Daily News investigation that found limited city efforts to crack down on illegal conversions, Council Speaker Christine Quinn said she hopes the new bill will prevent those conversions from ever happening by allowing the HPD to work with banks to vet out corrupt buyers from buying distressed properties from the banks.

“Slum lords exist on the belief that no one is watching,” Quinn said yesterday. “They’re a little bit like roaches, when the microscope is on them they run away.”

The bill will require the HPD to update their website quarterly with the number of foreclosure actions that exist in each community district. For buildings with twenty or more units, the HPD must list basic building information on the site so tenants and neighbors can be informed of foreclosure activities. This data will also help city officials to monitor struggling areas.

The bill is the latest passed legislation that Quinn proposed in her 2011 State of the City address, coming just two weeks after the Fair Parking Legislative Package, which was a major goal of last year’s speech. Quinn’s State of the City for 2012 is scheduled for next week.

To read more, click here.

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