New York is saving homes threated by the investors

New York City in its attempt to save housing threatened by investors has started off a new programme to save rented apartments belonging to the modest category. These were badly impaled by private equity companies during the time of the boom and then allowed to crumble and be foreclosed upon when borrowers failed to make payments.

The housing agencies of New York City would be provided with $750 million to grant as loans for a period of five years to allow new but responsible borrowers to purchase and refurbish the units that are in distress.

Nearly $150 million has been targeted for granting of easy loans for new owners. $600 million would be available as New York City Housing Development bonds. The capital would be used to purchase and repair crumbling building. The mortgages would be granted by the New York City Housing Development Corporation.

With the help of Department of Housing Preservation and Development the city is planning to focus on those apartment complexes that are in the worst condition. These comprise of 267 buildings having 3,564 apartments that are in bad states of disrepair and being foreclosed. Across New York City approximately 100,000 apartments are contained in properties that are weighed down by over excessive debts – the debts being larger than the value of the property, noted the department.

One of the first developers will be Mo Vaughn who was a former New York Mets player. In December 2009 his firm Omni New York won a bid at an auction for 14 properties in Bronx. The previous owner, Ocelot Capital Group had walked away from these units.

The Housing Commissioner, Rafael E. Cestero did not give the exact details of the numbers included in this rescue programme. He noted that the agency would first concentrate on repairing and rehabilitating the worst affected structure. He said, “Tenants are living in conditions that are unacceptable and need to be corrected. And buildings in that kind of physical deterioration have destabilizing impacts on other neighbourhoods.”

He added that for purposes of identifying the derelict buildings his agency would act in tandem with the lenders and with the owners who were current and were interested in purchasing properties. The previous owners who had become delinquent would be pressurized to sell off the houses because of violating code rules and defaulting in taxes.

Those championing the cause of the tenants lauded this step by the city authorities.

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