City officials and advocates decried plan to sell the foreclosed properties at unsustainable cost
New York, NY – City Council Speaker Christine C. Quinn, HPD Commissioner Mathew M. Wambua and Council Member Ydanis Rodriguez today joined tenants and advocates in Washington Heights to call on building owner Vantage and private-equity investment group Lone Star Funds to sell 10 buildings in foreclosure at a sustainable price to ensure the buildings’ conditions do not deteriorate.
Ten of the buildings, which first went into mortgage default in 2010, are listed for sale for $50 million, $6 million more than the current mortgage.
“It’s outrageous that Vantage and Lone Star would jeopardize the stable housing of hundreds of New Yorkers to turn a quick buck,” said Speaker Christine C. Quinn. “If these buildings are sold with millions of dollars more in unsustainable debt, tenants will be the ones who pay the price when the new owners can’t make mortgage payments or repairs. I urge Lone Star and Vantage to put tenants first and to sell these properties to a responsible buyer who will ensure the upkeep of these buildings is maintained.”
“Today we are sending a strong and unmistakable message: HPD is here to help. To the tenants: we are looking out for you. To the owners: we are watching you,” said HPD Commissioner Wambua. “These tenants deserve to be able to stay in safe, healthy and affordable housing. As a result, all ten of these buildings are now under the umbrella of our Proactive Preservation Initiative. It is no small point that we are talking about 475 apartments in this portfolio. I cannot express more strongly our desire to see these buildings sold to a responsible owner for a reasonable price, not one that reflects pure real estate speculation. The tenants deserve to feel secure in their homes and to know that the new owner will have the resources to bring these buildings back into good repair. I thank the HPD staff for their vigilance with regard to the physical and financial health of these properties, Speaker Quinn, Council Member Rodriguez, the Court-appointed receiver Judge Paul Victor, and our not-for-profit partners at CLOTH and UHAB for doing this good work.”
“We have seen the detrimental effects that these faulty investment schemes have had, not just on the residents of our community but the city and country as a whole,” said Council Member Ydanis Rodriguez. “I want to thank Speaker Quinn for her support of our residents and for understanding the necessity for affordable housing in northern Manhattan. It is past time that Lone Star and similar speculators did the responsible thing and adhered to the demands of their tenants. The utter negligence of this private-equity company in not even meeting with their tenants was why I joined with these fed-up members of my community several weeks ago to protest outside of the Lone Star offices. It is sad that we must continue this battle here today and I hope that Lone Star receives the clear message, don’t gamble on our homes!”
Speaker Quinn, Commissioner Wambua, Council Member Robert Jackson, State Senator Adriano Espaillat and elected officials joined the Tenant Associations of 566 and 570 West 190th Street and other residents from the Lone Star and Vantage Coalition to urge Lone Star to sell the buildings to a preservation purchaser who will maintain and make repairs to the properties.
“I proudly join Speaker Quinn, Commissioner Wambua and Council Member Rodriguez in support of our tenants who deserve affordable and fair housing,” said Congress Member Charles B. Rangel. “As the sponsor of the Low Income Housing Tax Credit and Public Housing Tenants Respect Act in Congress, I have fought hard to ensure that tenants and prospective New York City residents are provided with the proper support needed to finance affordable housing, while strengthening the quality and accessibility of our housing market. I hope that Vantage and Lone Star Funds will do the right thing by respecting and meeting the needs of the tenants.”
Though tenants and organizers have repeatedly requested meetings with Lone Star to discuss the investments group’s plans for the buildings Lone Star has been unwilling to meet with residents to address their concerns.
“Government must do everything in its power to safeguard our affordable housing stock,” said Manhattan Borough President Scott Stringer. “I am proud to join my colleagues in government to appeal to the private equity firm and building owner to stop the destructive predatory equity cycle that wreaks havoc on tenants. This building portfolio must be sold to a responsible owner who will maintain the physical condition of these buildings and respect the rights of the low and moderate-income tenants who are the backbone of Washington Heights and this City. Last year, I proposed to rescue 110,000 units housing in distress and enable the sale of these buildings to non-profit developers at affordable rates. We need out of the box solutions like this one to combat New York’s affordable housing crisis and stabilize our diverse neighborhoods.”
“Lone Star and Vantage are trying to profit off of the kind of speculative sale which led to mass deterioration of buildings across the city and contributed to the foreclosure crisis we continue to face today,” said Kerri White Co-Director of Organizing and Policy at the Urban Homesteading Assistance Board. “The asking price for this portfolio could lead to a new buyer relying on the same predatory practices as Vantage did which caused the buildings to fall into foreclosure and conditions to decline. Any potential new owner needs to know we will make sure they commit the necessary capital to maintain the properties while keeping them affordable for the families who currently live here.”
The ten buildings in this portfolio were purchased by Vantage, a known predatory landlord, in 2007, with a loan from Anglo Irish Bank. Under Vantage’s ownership, the buildings began to fall into disrepair. Though the building receiver is making repairs, maintenance issues will continue to persist unless a responsible owner is able to purchase the building and make large-scale system improvements.
“This is a critical situation in which Lone Star and Vantage are thinking of the financial gains for themselves and not how it could negatively impact the housing of their tenants. Tenants, who are living in alarming conditions because no one is listening to their needs, complaints, or fixing the numerous violations these buildings have. I urge Lone Star and Vantage to consider selling these buildings at a reasonable price to ensure that the new owners can keep up with the financial demands and continue to provide affordable and sustainable housing to our community and city,” said Council Member Robert Jackson.
Vantage, unable to sustain the building over the massive debt, began defaulting on their mortgage in August 2010.
“We are prepared to seek justice for these tenants, in court if necessary, unless Lone Star takes responsibility for the inevitable result of irresponsible lending practices,” said Daniel Anisfeld, Housing Unit Director at Manhattan Legal Services. “Further, we are committed to ensuring that any future purchaser of these properties complies with the law, making the repairs that are necessary for our clients’ health, safety, and dignity.”
The loan was purchased by Lone Star Funds, a Texas-Based private equity company, in December 2011 after Anglo Irish Bank was nationalized and auctioned its US commercial real estate loans. Lone Star won the bid on non-performing and sub-performing loans. Anglo Irish Bank had been aggressive in making commercial loans in the United States at the peak of the housing market.
In March of 2012, Lone Star Funds initiated foreclosure action against Vantage after Vantage defaulted on the $44 million dollar loan. The properties, which have deteriorated since Vantage’s purchase in 2007, are now being offered for sale for $50.75 million, well above the loan amount that Vantage was unable to sustain.