A credit union that specializes in financing the yellow-taxi business is squeezing cab drivers and their families whose pieces of the American Dream were wrecked by competition from app-based car services.
Melrose Credit Union is bringing new frustration and fear to cabbies whose lowered earnings leave them underwater on loans that rely on their once-valuable medallions as collateral.
Eddie Cobos, 49, of Queens Village, recounted the calls his 70-year-old mother, Amanda, received about their $2,400-a-month payments for the medallion she inherited from her husband, Stanley, who died in 2010.
“She was getting calls from Melrose to go to work or do what you need to do to make that payment,” Cobos said.
“It’s not that good — we still struggle with Melrose,” Amanda Cobos said.
Because it loaned so much money to cabbies, Melrose took a big financial hit after the city let ride-hailing apps like Uber and Lyft cut into the street hails that are the exclusive right of the yellow-taxi business.
The state Department of Financial Services in February 2017 took control of Melrose for “unsafe and unsound” conditions and placed it under conservatorship with the National Credit Union Administration, a federal agency.
Since then, borrowers like the Coboses — who have a long relationship with Melrose — have endured aggressive tactics and negotiations, such as demands for full payments upfront or additional assets as collateral.
Because the Coboses don’t want to drive a yellow taxi themselves, they leased their medallion to a broker. They send the trip revenue they get from the deal to Melrose to cover their payment on the $432,000 principal of their loan.
But the income no longer covers the $2,400 monthly payment. The broker has been sending them less and less money, from $3,000 at a high point down to $1,500 as of June, Cobos said.
The Coboses had to take out a six-figure reverse mortgage on their home to cover living expenses.
The Coboses are trying to modify the terms of their loan from Melrose and hope they can walk away with a clean slate. But the process has dragged on, they say. Melrose hasn’t communicated with them for a month.
“We told them we’ve been long-time customers,” said Eddie Cobos. “They were not working with their members, they were not working with us.”
“The industry, I don’t think it’s going to recover,” he said.
Taxi driver Kenny Chow, one of the six taxi drivers who have killed themselves recently, had a roughly $700,000 loan with Melrose and put his house up for collateral during his last modification.
“After the medallion price went down, they give you a lot of pressure — you got to sign with your wife, the house,” said Chow’s brother Richard. “This is totally unfair.”
The NCUA declined to comment. Calls to Melrose operations executive Frank Horvat were not returned.
Melrose has more than 200 open lawsuits against borrowers, primarily in the taxi industry.
Melrose in March sued Vasile Tocaciu and his son Alexander for the outstanding principal on loans totaling $466,843 with their medallion as collateral.
The Tocacius have since filed counterclaims against Melrose, claiming “predatory lending tactics,” “excessive financing … despite well-known and documented drastic decreases in taxi medallion values” and that the credit union “improperly or inadequately conducted due diligence, if any” about whether the family could repay the loans.
“Melrose will come after you with their lawyers if you owe a dollar,” Alexander Tocaciu told the Daily News.
Alexander Tocaciu, who was once a full-time graphic designer, makes ends meet by working as an Uber driver.
He said it’s tougher to turn a profit with a yellow taxi. He’s soured on the once-prosperous industry he grew up around and says he feels trapped by Melrose.
“If I could get out in one clean swoop and just go into my previous line of work, I would in a heartbeat,” Tocaciu said.
A rep for the law firm representing Melrose in the Tocacius’ case, Jaspan Schlesinger LLP of Garden City, L.I., declined to comment.
City Council members say they’re working on a comprehensive package of bills to help the taxi industry — but the process has dragged on, and angry taxi drivers and medallion owners are fuming about the Council’s inaction.
“Staff is working on it, they’ve been working on it very diligently, working very hard. It’s a complicated issue,” Council Speaker Corey Johnson said at a June 7 news conference.
Bhairavi Desai, director of the New York Taxi Workers Alliance, has been pushing for new city regulation.
She wants to cap the number of for-hire cars and require them to charge minimum fares based on the yellow taxi metered rate. That could boost medallion values, and make it easier for owners to negotiate with their lenders, Desai said.
But she wants a long-term plan from the City Council.