Mayor de Blasio’s administration has targeted at least 420 properties for foreclosure under a controversial policy that allows the city to take away buildings, and years’ worth of equity, from homeowners in predominantly black and Hispanic neighborhoods, city records revealed.
Brooklyn, upper Manhattan and the South Bronx have been most affected by the policy, known commonly as the third-party transfer program, data from the city Department of Housing Preservation and Development shows.
Since 2015, de Blasio’s second year in City Hall, the city has initiated transfer proceedings under the policy on 69 buildings in the 35th and 36th City Council districts, which cover Bedford Stuyvesant, Fort Greene and Crown Heights. Of those, seven buildings have been transferred to an interim owner, the non-profit Neighborhood Restore.
The city launched the program in the late 1990's under Mayor Giuliani as an alternative to the tax lien auctions used to extract payment from property owners who owed taxes or water and sewer bills. Once auctioned, the city had little control over what a landlord could do with a building’s tenants. Under third-party transfer, the city is able to ensure they aren’t displaced and their units remain affordable.
The current debt threshold for the city to initiate third-party transfer is at least $1,000 in city arrears for at least one year, or $1,000 for at least three years under the city’s Housing Development Fund Corporation program. The city is focused, however, on properties that have a large amount of arrears or have arrears and have been enrolled in one of the agency’s enforcement programs. On average, properties currently being looked at for transfer owed approximately $900,000.
In the Council districts that include Williamsburg, Bushwick, Brownsville and East New York, the city has initiated third-party proceedings on at least 107 homes and foreclosed on 20. In three South Bronx districts, 83 third-party proceedings have been launched since 2015, records show. Of those, 18 properties have changed hands.
The city has foreclosed on 62 properties citywide through the program overall since 2015, officials said.
Critics from homeowners to elected officials and lawyer-advocates claim the city has failed to notify property owners who are losing long-term investments.
“A lot of these homeowners had no idea these properties were being taken out from under them,” said Scott Kohanowski, an attorney and the director of the Homeowner Stability Project. “And the city takes all that equity. That’s the most appalling part.”
City officials contend they notify both landlords and tenants through mailed notices, robocalls, flyers and forums. But some say tenants don’t find out about what’s happening until it’s too late.
A lawyer for tenants at a foreclosure in the Bronx, Serge Joseph, said their co-op board did not receive notice.
“[They] thought their arrears were being taken care of,” he said. "They entered into an agreement plan with the Department of Finance. Then out of the blue, they were informed that the co-op no longer owned the building, that the deed was transferred to Neighborhood Restore.”
Those tenants now pay rent instead of continuing to pay maintenance and building up their equity in the building.
That’s the situation in which Cecilia Jones, 74, now finds herself. She bought 250 shares for her unit on Dean Street in 1996 under the city’s Housing Development Fund Corporation program. Her building is now under the control of Neighborhood Restore and the Bridge Street Development Corp.
“[The city] told people there would be no more shareholding, but they didn’t explain anything. They didn’t say why,” Jones said. “This whole group is just taking away people’s housing. That’s their purpose.”
Politicians, many from Brooklyn, have expressed alarm over the program. Attorney General Letitia James, a former council member from Fort Greene, called for it to be temporarily shut down in October. Brooklyn Borough President Eric Adams called for a probe in November. And state Assemblyman Walter Mosley (D-Crown Heights) also wants more scrutiny of the program.
“We have to take into account the mechanics of the third-party transfer program, those who are involved and how they got involved, and the justification for when a home or a building of value is removed from the possession of average, everyday working-class New Yorkers," he said.
De Blasio spokeswoman Jane Meyer said the administration is open to reform, but "cannot and should not do so at the expense of vulnerable tenants.”