Saturday, March 24, 2012

NYC Landlord Lender Unloads Mtgs Backed By Crappy Collateral To Non-Profit Developer; Tenant Groups Hope For Similar Deals To Save Affordable Rentals

In New York City, Crain's New York Business reports:

  • New York Community Bank, which has been targeted by housing advocates and city officials for selling off distressed mortgages to the highest bidders, has for the first time agreed to a discounted sale of notes to a nonprofit housing developer.


  • The bank has sold the debt on a portfolio of four foreclosed residential buildings in Bedford-Stuyvesant to the Mutual Housing Association of New York Management, Inc., a Brooklyn nonprofit that is funding the purchase by tapping a new city loan fund designed to preserve affordable housing.


  • The housing group got the $2.4 million worth of mortgages on the dilapidated buildings at a nearly 50% discount. The size of that price cut signals a big potential thawing in a protracted battle between housing advocates and the bank over how the institution is disposing of mortgages on properties in both physical and financial distress.

***

  • New York Community Bank is by far the biggest lender to landlords in the city. In all, the bank provides financing for more than 3,000 buildings housing 85,000 apartments, twice as many as anyone else in town. A study by a housing group last year found that New York Community Bank finances the owners of nearly 9,000 distressed apartments, more than the next three banks combined.


  • The lender has come under fire from activists and city officials for selling distressed mortgages on rundown properties at prices that would make it tough for new owners to repair the buildings. Last year, the city backed an $8 million bid by Mutual Housing for a portfolio of eight dilapidated buildings in the Bronx, but New York Community Bank sold the mortgage to investors for only a slight discount on the mortgage's $16 million face value.

***

  • After battling each other on the streets and in court, the bank and advocates have finally reached a détente in which nonprofit developers will be given a first look at any distressed mortgages the bank is looking to sell. [...] Tenant advocates applauded the Mutual Housing deal and hoped it could serve as a model for the growing number of buildings in financial and physical distress across the city.(1)

For more, see NYC's biggest landlord lender cuts mortgage deal (New York Community Bank's sale of distressed mortgages on four residential properties in Brooklyn at a 50% discount will leave the buyer with enough cash for much-needed rehabs).

(1) In this story, the following excerpt provides some insight as to why New York Community Bancorp head Joseph Ficalora decided it best to reach a deal with his critics:

  • He wouldn't say what moved him to lay down arms, but the FDIC's decision to cut his bank's community-lending rating may well have been a factor. Starting two years ago, Mr. Ficalora has been expanding nationally, snapping up failed banks in Ohio, Florida and Arizona.

    The seller? None other than the FDIC. If he wants more busted banks sent his way, he needs good relations with his regulator.

    As Mr. Ficalora sees it, his decision to forge a deal with his critics was just a matter of simple logic. “When a baby is howling, you eventually figure out that you have to change the diaper,” he said.

No comments: