City Apartments Fast Becoming Repo Homes
About 80,000 tenants in New York City are in danger of becoming victims of foreclosures as more and more affordable apartments are facing the threat of becoming repo homes.
Data showed that thousands of low-cost apartments are owned by landlords who are struggling to pay their monthly mortgage, much more maintain their properties.
Last month, tenants of Schomberg Plaza staged a rally outside the building, owned by Urban American Management, to complain that the new owner was not doing anything to maintain the property.
The tenants urged the Federal National Mortgage Association, which holds the loan on the property, to force the owner to monitor building conditions and do regular maintenance and disclose Urban American’s financial status.
Deutsche Bank’s March investor report, entitled “Commercial Real Estate at the Precipice,†has warned that the continuous decline in property values are making it difficult for borrowers to find refinancing for their loans.
According to the report, the difficulty in refinancing is putting a lot of properties on the brink of becoming repo homes. If this happens, not only the owners will be affected but also the banks that hold the delinquent mortgages as they will be saddled with both commercial and single-family home delinquencies.
The report calls on the U.S. government to launch programs that will prevent distressed commercial real estate and repo homes from flooding the market because it will result on a downward spiral of both commercial and residential real estate prices.
Meanwhile, housing advocates are concerned over the growing number of renters stuck on repossessed apartments whose owners could not afford to perform even a routine maintenance.
Various organizations, including the Urban Homesteading, Tenants and Neighbors have called on the federal government to require banks that hold loans on residential buildings to revise loan terms to make them affordable and to transfer the property ownership to buyers who could ensure that the apartments would remain affordable.
A failed amendment was introduced by U.S. Senator Charles Schumer that would have mandated banks that received funds from the federal government’s Troubled Asset Relief Program to alter terms of loans on overleveraged buildings and to make sure that they are in good financial condition.
Schumer is working closely with the Department of Housing and Urban Development, Treasury and advocates to protect the stock of affordable housing in New York City from becoming repo homes.
