Foreclosure Crisis: It’s Not Over Yet!

Last Thursday, we attended a conversation at the New York City Economic Development Corporation. The panel, “The Impact of Multifamily Foreclosures and Over-Mortgaging in Neighborhoods in NYC,” featured Harold Schultz of the Citizen’s Housing and Planning Council, John Warren of Workforce Housing Advisers, and Max Weselcouch of NYU’s Furman Center for Real Estate. Here are some salient points from the panel that are very relevant to our work:

  • It’s not over yet: According to John Warren (and we agree), the amount of multifamily buildings in entering into foreclosure in New York City is not likely to slow down anytime soon. In fact, as mortgages originated at the height the real estate boom (2007) enter a period amortization, the number of foreclosures will likely increase. We’re buckling our seat-belts for the long road ahead. We hope that the work we have already done will have paved the way for more preservation purchases.
  • It’s tough to “value” multifamily housing: It’s tricky to develop a workable database of multifamily housing because two completely identical buildings could have totally different value, given that a major factor in determining value is rental income. Rent rolls are not public record, so in determining whether a building is overleveraged Harold Schultz says “Mostly, you know it when you see it.” This reality makes the work that UHAB and our allies do very valuable. Though resources like RealtyTrac serve to point in the right direction, the most valuable data valuing affordable rental housing in NYC comes from organizers pounding the pavement, getting to know buildings and talking with tenants.
  • The model of buying property in New York City is fundamentally changing: Max Weselcouch demonstrated that the level of foreclosure in the city is entirely unprecedented. In order to adapt, affordable housing developers are having to alter the way that they do business. Rather than buy deeds to properties or acquire them through programs like Third Party Transfer, developers are having to negotiate with banks to buy notes, finish foreclosures, and take title at auction. In this model, the non-profit community development community is consistently being priced out. UHAB and our allies are working to develop a model of acquiring assets and finishing foreclosures which would allow non-profits to stay in the game and keep the buildings affordable in perpetuity. Stay tuned!
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