Townhouse Management on Buying Spree of Flushing Bank Mortgages

About two years ago, we began organizing an eight building portfolio connected to the notorious wrong-doer Frank Palazzolo. At the time, these buildings, including 1221 & 1225 Sheridan, 735 Bryant and 3212 Cruger, were in foreclosure and suffering from severe neglect. Tenants were living alongside rats, roaches, mold, lead paint, crumbling ceilings and leaky faucets without heat or hot water.

After fighting for a preservation deal for nearly a year, these buildings were sold against tenants’ wishes to a group called Townhouse Management. This happened in early Spring 2011, though it took the group until August 2012 to secure the deeds to the properties. Tenants were cautiously optimistic about a Townhouse landlord, and initially the building saw a rapid decline in dangerous code violations. But, as we’ve been saying for quite some time, code violations do not tell the whole story.

Last week, we went out to these buildings to check in on repairs. These are some of the things we saw:

735 Bryant
735 Bryant
1221-1225 Sheridan Ave
1221-1225 Sheridan Avenue

1221 & 1225 Sheridan Avenue had experienced a fire in the boiler room the very morning we arrived.  When the fire erupted, the fire alarm did not go off, and tenants were understandably scared and frustrated. Other tenant responses about Townhouse Management was also not stellar. Many people feel neglected and abused. Tenants also feel that conditions have not improved, and management quality has not changed.

Meanwhile, Townhouse Management is on a buying spree. They are purchasing mortgages on buildings in foreclosure all over the Bronx and Brooklyn. Notably, they are buying a significant portion of Flushing Savings Bank’s distressed portfolio. Various LLCs associated with Townhouse Management have bought the mortgages on at least 15 properties in foreclosure from Flushing Savings Bank over the past year.

Nearly half of Flushing Bank’s foreclosure portfolio is in the Alternative Enforcement Program. On these highly distressed buildings, it is essential that the bank not do business with groups like Townhouse Management. Townhouse Management has proven themselves incapable of providing the rehabilitation that these properties need. This kind of cooperation between a lender and a negligent, predatory landlord is exactly the kind of behavior that led us to a foreclosure crisis in 2008, and it cannot be allowed to continue here.

We are working with tenants in many of the buildings that are in foreclosure with Flushing Savings Bank, and fighting alongside them for a safer, more affordable, more habitable future. We will fight to prevent the sale of future mortgages to Townhouse Management, or any buyer not on HPD’s approved developer list.  Stay tuned.


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