Bronx Tenants Sue Lender To Cough Up Cash For Urgent Repairs To 8 Buildings Abandoned By Landlord As Bank Scrambles To Unload Unwanted Promissory Note

In The Bronx, New York, Crain's New York Business reports:

• A group of Bronx tenants filed a lawsuit Thursday seeking to force New York Community Bank to hand over money to repair eight foreclosed buildings riddled with code violations.

• The suit is similar to one filed last year by tenants in foreclosed buildings that had been bought by Los Angeles-based Milbank Real Estate. In that case, a Bronx judge ordered owner LNR Property Corp. to put up $2.5 million to cover repairs on the 10 rundown properties.

• “The Milbank tenants have established a new tool and now tenants no longer have to endure horrible conditions,” said Jonathan Levy, deputy director of the housing unit at Legal Services NYC-Bronx, which represents the tenants. “They have a way to go to court and seek relief.”

• Meanwhile, a nonprofit housing group has made a bid of more than $8 million to buy the mortgage on the properties, which fell into foreclosure in October 2009. But New York Community Bank has rejected the offer by Mutual Housing Association of New York Management and is believed to be negotiating with a buyer willing to pay closer to the note's face value, which is more than $16 million.

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• The eight buildings were purchased in 2006 by New York Affordable Housing Association, a collection of some of the city's most notorious landlords and several private equity players, with a $14.7 million mortgage from New York Community Bank. In June of 2008, the group refinanced the portfolio, taking on an additional $4.5 million in debt.

• If the group, which never responded to foreclosure notices, used the extra financing to make building repairs, it isn't evident, tenant advocates say. Mold, collapsed ceilings, missing tiles, outdated wiring and broken boilers abound, they say. The elevator in the one building hasn't worked for several years.

For more, see Bronx tenants sue bank for urgent repairs (Move by residents of eight buildings against NY Community Bank follows similar, precedent-setting suit won by tenants group in the borough last year, in which a judge ordered $2.5 million for repairs).

For story update, see The Wall Street Journal: Bank Sells Bronx Mortgage:

• New York Community Bank has sold the mortgage on eight dilapidated buildings in the Bronx, bank officials said Thursday, disposing of its interests in properties that have attracted tenant protests. The purchaser bought the mortgage, which had a $16 million balance, at a discount. The bank declined to identify the buyer or to say how much the buyer paid. [...] Jonathan Levy, an attorney with Legal Services NYC-Bronx, which is representing the tenants, said he was "stunned" by the news of the sale.