Crown Heights Tenants Rally for Affordable Housing

Tenants from 230 and 232 Schenectady Avenue rallied last month against Sanford Solny, a Borough Park based broker who is working with slumlord Bernard Neiderman and his friends to flip their homes for profit.

Solny, Neiderman and their friends will be unsuccessful! For the past two years, tenants have been working with established non-profit housing organization, the Mutual Housing Association of New York, on a deal that will both give tenants a say in how their buildings are managed and keep their rents affordable in perpetuity.

Thanks to JFREJ, NYCC, the Crown Heights Assembly Tenant Union, Take Back the Land, and Brooklyn Legal Services for their continued support!

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CROWN HEIGHTS TENANTS RALLY AGAINST ATTEMPT TO FLIP ILEGALLY PURCHASED BROOKLYN HOMES

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FOR IMMEDIATE RELEASE Jan. 15, 2014

Contact:

Ismene Speliotis, 718-246-8080 ex 203
Kerri White, 212-479-3371

CROWN HEIGHTS TENANTS RALLY AGAINST ATTEMPT TO FLIP ILLEGALLY PURCHASED BROOKLYN HOMES

BROOKLYN (Jan. 15, 2014) – Residents of two decrepit rent-regulated buildings in Crown Heights and their supporters rallied today to demand that the new owners – who illegally bought the foreclosed-upon homes — stop trying to make a quick buck on the backs of the tenants.

“For the past three years, tenants in all four of these buildings have fought for their homes while suffering unconscionable living conditions,” said Kerri White, Director of Organizing and Policy at the Urban Homesteading Assistance Board, which is helping the tenants, along with New York Communities for Change.

“There is a preservation deal ready to move forward, it has been funded by the city and is supported by the tenant associations. (Broker Sanford) Solny and his investor friends must drop their opposition to the foreclosure immediately. This is a fight they cannot win: their protracted and frankly ridiculous interventions only force tenants to suffer for longer.”

The deteriorating buildings, which have been in foreclosure since 2009, have racked up 319 code violations on just 12 units.   There are holes in walls, water damage and other violations.

The way we are living here, they are treating us like animals,” said Pinkrose James, Tenant Association representative. “If Bernard Neiderman’s friends think they can get our buildings back from the tenants, they are wrong. We are here to demand that the foreclosure move forward so the Mutual Housing Association of New York (MHANY) can begin work on our homes, and to tell let anyone interested in buying these buildings to back off.” 

In March 2012, the Mutual Housing Association of New York (MHANY) purchased the mortgages on the buildings with the intentions of becoming owners once the properties wound their way through the foreclosure process. MHANY bought the mortgages with the support of the tenant associations, housing advocates, and city officials. The 25 year-old non-profit organization has plans that include a complete renovation in the buildings, funded by the Department of Housing Preservation in Development.

However, in the fall of 2012, slumlord Bernard Neiderman illegally sold the deeds to 230 and 232 Schenectady Avenue to a group of investors based in Borough Park. It is illegal to sell buildings that are in foreclosure. These investors, working through broker Sanford Solny, hope they can flip the buildings, buying out MHANY’s interest and making money off the top. This speculative behavior has slowed an already glacial foreclosure process, forcing tenants to wait longer for the repairs they desperately need. The buildings are both in the City’s Alternative Enforcement Program. The tenants rallied outside Solny’s office in Borough Park to demand that these investors drop their baseless and speculative opposition for the foreclosure, and allow the preservation deal to move forward.

“Unfortunately, many neighborhoods that low- and moderate-income New Yorkers have called home for generations have increasingly been affected by the speculative real estate market.  As buildings are sold at speculative prices amongst uncaring and unscrupulous investors — prices that cannot be maintained with the legal residents and legal rents — the greatest victims are the tenants themselves,” said Ismene Speliotis, Executive Director of the Mutual Housing Association of New York.

“MHANY ‘s plan to purchase the note, oversee the completion of the foreclosure, rehabilitate the buildings, and provide decent and affordable housing to the residents is still intact.  We are working with all parties to complete the foreclosure and take care of the residents and the buildings, preserving another affordable housing asset for the Bedford Stuyvesant and Crown Heights community.”

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.

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.”

Crain’s New York Business: City’s biggest landlord lender cuts breakthrough deal.

At The Surreal Estate, we raise our glasses to the Mutual Housing Association of New York for for their successful negotiation with New York Community Bank on a preservation note sale. Congratulations to the 29 families who are now looking forward to renovations and long term affordability.

New York Community Bank, which has been targeted by housing advocates and city officials for selling off distressed mortgages to the highest bidders, has for the first time agreed to a discounted sale of notes to a nonprofit housing developer.

The bank has sold the debt on a portfolio of four foreclosed residential buildings in Bedford-Stuyvesant to the Mutual Housing Association of New York Management, Inc., a Brooklyn nonprofit that is funding the purchase by tapping a new city loan fund designed to preserve affordable housing.

The housing group got the $2.4 million worth of mortgages on the dilapidated buildings at a nearly 50% discount. The size of that price cut signals a big potential thawing in a protracted battle between housing advocates and the bank over how the institution is disposing of mortgages on properties in both physical and financial distress.

“It’s been a constant negotiation all along, figuring out how we get to the middle ground,” said Christopher Beck, vice president and business relations officer at New York Community Bank. He said the sticking point had been reaching deals “that allowed for the preservation of the underlying property for affordable housing while maintaining a reasonable economic outcome for the bank’s shareholders.”

It’s the first time the New York City Acquisition Fund—launched in 2006 with foundation and public money—has been used to acquire distressed debt. Before this deal, the fund had only facilitated the purchase of buildings, but a second facility established in 2010, a $60 million fund led by Citi Community Capital, made possible the purchase of debts on buildings as well. Mutual Housing, which got a $1.35 million loan from the fund, is also the first nonprofit group in the city to purchase a distressed note.

“I give [Mutual Housing] a ton of credit for cutting a deal that works on both sides—that fits into an affordable housing program and that the bank can agree to,” said Abby Jo Sigal, a vice president at Enterprise, an affordable-housing group that is a managing member of the acquisition fund.

Once the four Brooklyn properties wind their way through the foreclosure process, Mutual Housing plans to use a loan from the city’s Department of Housing Preservation and Development to buy them. Three of the four properties, which contain a total of 29 units, are in the city’s Alternative Enforcement Program, an initiative aimed at improving conditions in the worst 200 buildings across the five boroughs.

“All the money we didn’t give to the bank we’ll put into rehabbing these buildings that are really, really needy,” said Mutual Housing Executive Director Ismene Speliotis. She said three of the buildings would likely require gut renovations and that tenants would be relocated while the work is done.

New York Community Bank is by far the biggest lender to landlords in the city. In all, the bank provides financing for more than 3,000 buildings housing 85,000 apartments, twice as many as anyone else in town. A study by a housing group last year found that New York Community Bank finances the owners of nearly 9,000 distressed apartments, more than the next three banks combined.

The lender has come under fire from activists and city officials for selling distressed mortgages on rundown properties at prices that would make it tough for new owners to repair the buildings. Last year, the city backed an $8 million bid by Mutual Housing for a portfolio of eight dilapidated buildings in the Bronx, but New York Community Bank sold the mortgage to investors for only a slight discount on the mortgage’s $16 million face value.

“When we discussed the notes last year, maybe we had to go through this process to figure out a way to work together,” Mr. Beck said. “It was a first attempt and we were very far apart. All the pieces weren’t in place to make it happen. The encouraging part about this transaction is it’s proof we can get there. We hope it’s not a stand-alone transaction, but a future model for preserving affordable housing.”

City Council Speaker Christine Quinn, who had criticized the bank, said, “I’m thrilled these four buildings will be preserved and I look forward to continued collaboration with New York Community Bank to protect tenants and their homes.”

After battling each other on the streets and in court, the bank and advocates have finally reached a détente in which nonprofit developers will be given a first look at any distressed mortgages the bank is looking to sell.

“There is at this point an open line,” said Peter Madden, director of distressed asset financing programs at the Department of Housing Preservation and Development. “New York Community Bank has shown a willingness to work with the city, to sit down at the table with the city and tenant organizing groups. They still have their fiduciary goals they need to meet, but the fact that this deal happened speaks for itself. We look forward to future deals with them.”

Tenant advocates applauded the deal and hoped it could serve as a model for the growing number of buildings in financial and physical distress across the city.

“It’s great, but we have to figure out how to do it on a much bigger scale,” said Dina Levy, director of organizing and policy at the Urban Homesteading Assistance Board. “It sets the tone for what needs to happen again and again.”

Tackling New York Community Bank

This story is getting old: irresponsible loans given to irresponsible landlords. Our heads are still spinning from the last round of predatory equity, yet here we are, witnessing the continued repetition of worst practices in housing.  We yelled about it then, and now, with voices hoarse but persistent, we keep yelling in hopes that our pleas might penetrate the iron walls of the bank.

In the last few weeks, tenants who live in the eight buildings owned by New York Affordable Housing Associates (NYAHA), and in the midst of the foreclosure process with New York Community Bank (NYCB), have risen up to demand an end to the bad conditions that characterize the tacitly accepted lower standard of living in the Bronx. These buildings went into foreclosure in November 2009 when NYAHA, a conglomeration of some of New York’s most infamous landlords, defaulted on two mortgages with an outstanding debt of $15,918,254. Riddled with 1,610 code violations across the eight buildings, two of the buildings have racked up so many violations that they’ve been placed in the Alternative Enforcement Program, an HPD initiative to more closely monitor and enforce urgent repair work in the 200 worst buildings in the city.

Some tenants in the buildings have lived there for much of their adult lives and many others are new residents ushered in by various Department of Homeless Services (DHS) programs. Long term tenants have watched their homes deteriorate from beneath their feet, quite literally, as floors droop inward due to excessive mold and water damage. Tenants who came from the shelters wonder if perhaps things were better where they came from.

Following the rejection of the bid made by tenant-endorsed prospective buyer Mutual Housing Association of New York (MHANY), tenants stepped up their campaign against NYCB. With the help of UHAB, MHANY, Bronx Legal Services, and the Urban Justice Center, tenants filed the landmark “Milbank lawsuit” which effectively sues the bank in order to get more money allocated to the receiver for building repairs. They also presented the court papers to a local NYCB branch manager while wielding picket signs and marching outside the bank, garnering support for their call to “Write Down Loans, Save Our Homes!”

Unfortunately, despite the pending lawsuit and the tenants’ visible rage,  NYCB went ahead and sold the mortgage notes to an unnamed speculator, carrying the still lingering load of unsupportable debt in tow.

Although it seems that the battle to preserve these 8 buildings has now been lost,  tenants and organizers are currently brewing up new strategies to challenge NYCB’s systematically damaging lending practices. Here at UHAB we are busy compiling research about other NYCB foreclosures with high code violations and what we are discovering does not bode well for NYCB’s image…

Stay tuned for more information about upcoming actions to expose and tackle this  terrible threat to affordable housing in NYC.

“Bank Sells Bronx Mortgage”: Wall Street Journal

As published in the Wall Street Journal, by Joseph de Avila


New York Community Bank has sold the mortgage on eight dilapidated buildings in the Bronx, bank officials said Thursday, disposing of its interests in properties that have attracted tenant protests.

The purchaser bought the mortgage, which had a $16 million balance, at a discount. The bank declined to identify the buyer or to say how much the buyer paid.

“We received several offers on the note,” said Ilene Angarola, a spokeswoman with New York Community Bancorp, the bank holding company. “We feel that this party has the experience and capacity to properly care for and manage the properties.”

Also on Thursday, tenants in the buildings filed a motion in foreclosure proceedings for the properties seeking to hold New York Community Bank responsible for repairs. The tenants said they were requesting funds to fix leaky roofs, remove mold and update electrical equipment in the buildings.

Graphic courtesy of The Wall Street Journal

Jonathan Levy, an attorney with Legal Services NYC-Bronx, which is representing the tenants, said he was “stunned” by the news of the sale.

“We’ll see who they are, what they are about and whether we can work with them,” Mr. Levy said. “We hope that it actually is someone that is responsible and the price is sustainable. If not, we will pursue other remedies.”

From 2004 to 2008, New York Community Bank loaned $19 million on the eight distressed properties to New York Affordable Housing Associates, a local housing company. But the rents at the apartments couldn’t support the loans, and the mortgage went into default.

Officials with New York Affordable Housing Associates didn’t return calls seeking comment.

“No one can really be surprised about what happened,” Mr. Levy said.

It’s a problem that has played out throughout the city. About 100,000 rent-stabilized apartments are in foreclosure or at risk of foreclosure because they have too much debt, he said.

Ulisa Rios, a tenant in one of the buildings, said the ceiling of her bathroom collapsed due to an unrepaired leak. Now one of her floors is beginning to sink in.

“God forbid the floor caves in. Anybody can get hurt,” said Ms. Rios, 24 years old, who lives in the apartment with her son, who is 7.

It will cost about $23 million to repair all eight buildings, at about $75,000 per unit, according to Ismene Speliotis, executive director of Mutual Housing Association of New York Management Inc., a nonprofit housing organization.

MHANY Management made a bid in December to buy the eight Bronx properties for about $8 million, but was rejected by New York Community Bank.

New York Community Bank officials declined to comment on the motion filed on Thursday by the building residents.

March 11, 2011