It may seem counterintuitive that city renters could be vulnerable during the housing crisis that has many homeowners defaulting on mortgages, but Sen. Chuck Schumer is calling for the protection of tenants of low-cost housing units who may bear the final brunt of failing building owners.
Schumer is concerned that owners who purchased buildings during the recent real estate boom--expecting ever-increasing rents--are now struggling to meet loan obligations and may be tempted to oust lower-income residents or let buildings fall into disrepair, according to The New York Times.
“The entire predatory equity enterprise is a house of cards built on a foundation of fantasy and greed,” Mr. Schumer is quoted saying in the Times. “The whole thing collapses when there is any depreciation, or even a leveling, in the property’s value, which is the reality we now face. You would think these deals would’ve stopped a year ago, but they are still going forward."
NY's senior senator is on the Senate Committee on Banking, Housing and Urban Affairs and estimates that 60,000 rental units in New York are at risk in the current credit crisis. Schumer and tenant advocacy groups want companies that purchased low- and moderate-income housing buildings to be able to restructure their loans to avoid bankruptcy and the deterioration of the city's housing stock. He also wants the SEC to investigate whether loans were made on the basis of false or misleading rent projections.
In 2006, real estate firm Tishman Speyer purchased Stuyvesant Town/Peter Cooper Village for $5.6 billion in the largest housing transaction ever. Since then, the value of the investment has reportedly dropped 10% and the firm has been looking to evict rent-controlled tenants in favor of market-rate renters.
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