Advocates say the mortgage guarantor should help pay for repairs on rent-regulated properties.
In 2005, Cammeby’s International bought a portfolio of five rent-regulated housing complexes in the city for $295 million. Just two years later, it flipped the grouping of former Mitchell-Lama buildings to Urban American Management for $918 million.
Deutsche Bank underwrote the $700 million loan that funded the purchase, which resulted in a tripling of the properties’ debt service.
Since the sale, tenants in the buildings, located in Manhattan and on Roosevelt Island, have reported a steady decline in services and maintenance. They protested against Urban American, but say they got few results. Now, they’re trying a different approach. They’re arguing that Fannie Mae, the government-sponsored enterprise that bought the debt from Deutsche Bank, has a duty to make sure buildings it owns loans on don’t fall into states of disrepair.
And they’ll rally in Harlem Thursday afternoon to call on the mortgage giant to put a stop to leaks, lack of hot water and other maintenance problems they say have plagued the buildings. Leaders representing 7,000 tenants in buildings across the city where Fannie Mae owns the debt will participate in the rally.
“With the rents they’re taking in, there’s no way Urban American can pay that almost $1 billion mortgage and continue to maintain the buildings,” said Jackie Peters, secretary of the Metro North Riverview Tenant Coalition, one of the buildings in the portfolio.
Ms. Peters added that up until a few days ago, soot from a February fire in one of Urban American’s buildings had not been cleaned.
“We believe that these poor conditions indicate that the owner does not have the available capital to operate the housing in a safe and livable manner,” wrote a collection of 10 city, state and federal elected officials in a February letter to Fannie Mae.
Urban American Chief Operating Officer Douglas Eisenberg released a statement to Crain’s saying the properties’ finances are healthy and that his company has continued to invest in them.
“We are committed to affordable housing for working families and we work hard to provide the best housing possible,” he said. “Anyone who knows these buildings knows that they are in significantly better shape today than when we purchased them.”
Fannie Mae, for its part, says through a spokesman that it has been “engaged directly with tenant advocacy groups to hear concerns about certain properties where we hold the loan, and we have met with owners of these properties to share these concerns….We are taking steps through our servicers to compel building owners to properly maintain the properties.”
But some tenant advocates point to Fannie Mae’s record with a separate portfolio that went into foreclosure in March to argue that the mortgage-guarantor has remained on the sidelines even as loans it holds falter.
Fannie Mae did not intervene, the advocates say, as buildings it held the loan on in the Bronx fell apart over the last two years. Conditions became so bad for 300 families in 16 Bronx buildings until recently owned by a company called Ocelot Capital that eight of the properties are now part of New York City’s Alternate Enforcement Program, which targets the worst 200 offenders in terms of code violations.
Advocates say Fannie Mae just last week returned the foreclosed loan on the Ocelot buildings to Deutsche Bank. The move angered the tenant groups that had hoped the foreclosure proceedings would produce a new owner that could provide relief.
“Fannie is saying we can’t help until you’re off a cliff, but when things are going off the cliff, they cut and run,” said Dina Levy, director of organizing and policy for the Urban Homesteading Assistance Board. “That’s not OK. It’s not OK.”
Ms. Levy contends that last year’s Housing and Economic Recovery Act stipulated that government-sponsored enterprises like Fannie Mae have an obligation to enhance the preservation of affordable multi-family housing. “Is the Ocelot outcome, dumping these buildings at their darkest hour, really meeting their new mission?” she asked.
The Fannie Mae spokesman responded: “With respect to the Ocelot Capital properties, Fannie Mae is working through the courts to secure receivers to protect each of the properties in that portfolio. We will continue to work through the receivers in the interest of tenant safety and we have made a financial commitment to support important safety repairs at the Ocelot Capital buildings.”
Ross Weinstein, managing partner at Union Square Mortgage Group, said Fannie Mae likely doesn’t have an obligation to help. The tenant advocates, he added, may be trying to use the U.S. Treasury’s bailout of Fannie Mae as leverage.
“Because it’s Fannie Mae and because Fannie Mae has government intervention, people are asking that it be different [than a private lending guarantor],” he said.
Tenants in the Urban American buildings will be joined Thursday afternoon by Ocelot tenants and those in another portfolio of rent-regulated apartments, owned by a joint venture between SG2 Properties and BlackRock Realty Advisors, which encompasses some 3,600 units in 51 Bronx buildings. Fannie Mae bought the debt on about half of the buildings from Sovereign Bancorp in February 2007, and tenant advocates worry they could face the same fate as the Ocelot families. An SG2 spokesman declined to comment.
“Fannie Mae certainly has the power to step in and they should use that power,” said Amy Chan, an organizer with Tenants and Neighbors. “We see a role for Fannie to intervene in response to the conditions and make sure buildings are at a sustainable debt level.”
Filed Under :
Manhattan, Professional Services, Residential Real Estate, Roosevelt Island
New York » New York City » Manhattan » Roosevelt Island
Related Stories :
» $10M in foreclosed homes auctioned off
» City leaders push to green NYC buildings