CITY HALL – City Council Speaker Christine C. Quinn today announced the formation of a new Predatory Equity Task Force, which will monitor problems resulting from the continued fallout of the housing bubble, and perform rapid response when these problems threaten the welfare of building tenants.

The Task Force will have two main goals. First, it will track buildings that are currently – or at risk of becoming – physically or financially distressed, and respond quickly to urgent problems. The Task Force will pressure owners and lenders to maintain their buildings or sell to a responsible owner approved by the city. Second, the Task Force will continue to explore the core issues behind these problems, and propose new initiatives and policy changes at the federal, state, and city levels.

The Task Force will bring together a number of housing advocates and experts, and will be co-chaired by Housing and Buildings Committee Chair Erik Martin Dilan, Councilmembers Inez Dickens and Annabel Palma, and New York City Department of Housing Preservation and Development (HPD) Commissioner Rafael Cestero.

“The Council is proud to have worked with HPD, Fannie Mae, Senator Schumer, and Congressman Serrano to ensure that the winning bidder for the Ocelot portfolio debt has a good reputation and is committed to preserving the buildings,” said Speaker Christine Quinn. “Now we need to use that success as a model for dealing with similar buildings around the city. The Predatory Equity Task Force will allow us to quickly respond to foreclosures around the city, and find creative new policies to prevent problems before they escalate.”

“There are too many tenants across the city living in buildings where the owners paid too much and cannot afford to maintain them,” said Housing and Buildings Committee Chair Erik Martin Dilan. “The sale of the Ocelot portfolio debt to Omni, a group committed to ensuring the buildings are maintained, sets a good example for what we expect from other lenders. I look forward to working with the task force to ensure that all tenants living in buildings with similar circumstances are protected. I would also like to commend Fannie Mae and HPD for their efforts in facilitating the purchase by Omni.”

“I am pleased that Speaker Christine Quinn has organized the Predatory Equity Task Force,”said Council Member Inez Dickens. “As a co-chair of this task force, my colleagues and I will closely monitor landlord/tenant issues as it relates to ownership and management. We will do our best to safeguard the rights of all New Yorkers to live in affordable quality and dignified environments.”

“I am pleased and encouraged that Fannie Mae has worked with us and HPD to guarantee that the new owner of the Ocelot portfolio debt will have sufficient resources to make necessary repairs and to appropriately maintain these buildings,” said Council Member Annabel Palma. “I am proud to be serving as a co-chair of the new Predatory Equity Task Force in order to help ensure that this same commitment is extended to tenants in similar buildings.”

“Omni brings a track-record of success and has worked with the City on some of our most challenging and distressed properties. Fannie Mae’s decision to accept Omni’s bid for the Ocelot portfolio is a big step in the right direction that puts these properties on the path to finding responsible ownership,” said HPD Commissioner Cestero. “I am pleased to partner with Speaker Quinn and these esteemed members of the Council in this important effort to help preserve, maintain, and strengthen our City’s affordable housing stock for families throughout New York.”

The Predatory Equity Task Force is based on a process used to help ensure the responsible sale of the debt on the portfolio of properties in the South Bronx formerly owned by the Ocelot Capital Group. Between 2006 and 2007, Ocelot purchased 781 units in 25 buildings and subsequently defaulted on its mortgage. Prior to default, Ocelot allowed these buildings to fall into extreme disrepair, exposing residents to unsafe and unacceptable living conditions.

HPD and Fannie Mae worked with the City Council and other elected leaders over the last few months to seek out responsible candidates to participate in the Ocelot debt auction. Today HPD and Fannie Mae announced that Omni New York LLC has been chosen as the successful bidder for the Ocelot portfolio. The sale is expected to help facilitate the rehabilitation of the properties while preserving affordability for the families who currently live there.

The problems facing the Ocelot portfolio face many other buildings throughout the city as well. At the height of the housing boom, a large number of equity investor groups purchased multifamily rental properties using unrealistic revenue expectations and taking out loans that could not be supported by existing rent roles. Soon they faced major revenue shortfalls, and landlords responded by cutting back on maintenance, which in turn led to physical distress.

Those that remain unable to afford debt service payments soon face foreclosure, putting the future of thousands of tenants at risk. The Predatory Equity Task Force will provide these buildings with much needed support from city government to ensure good conditions for tenants.