Posted by SamE on September 04, 2001 at 22:39:18:
In Reply to: 203(k) Survivors Rally for Rights! posted by SamE on September 04, 2001 at 22:36:33:
Housing Pledge by Cuomo Faces an
Response to Mortgage Scandal Is Reviewed
Two days before leaving office in January, Housing Secretary Andrew
M. Cuomo announced an ambitious plan to cope with a home mortgage
scandal that had embarrassed him just as he was preparing to enter the
race for governor of New York.
Mr. Cuomo pledged that the federal Department of Housing and Urban
Development would pay to rehabilitate hundreds of dilapidated
brownstones in Harlem and Brooklyn and would turn them over to
reputable community groups to increase the stock of low-cost housing.
At the time, Mr. Cuomo said that his agreement with the community
groups would be binding on the incoming Republican administration.
But more than two months later, the future of Mr. Cuomo's plan is
uncertain. "The entire issue is under comprehensive review," said
Sean Cassidy, the new deputy commissioner of the Federal Housing
Administration, which is part of HUD. "It has been the focus of
intensive discussions for the last several weeks here at the
According to people familiar with some of those discussions, HUD
officials have raised questions about the cost of the Cuomo plan,
which by one estimate could be as much as $100 million. And there is
also speculation that the new administration in Washington would be
loath to spend such a considerable sum to help Mr. Cuomo save face
and improve his chances of becoming governor.
Officials of the groups covered by the agreement say they are waiting
for direction from the housing department. "We're not making any
presumptions, other than the hope that we can work with this
administration," said William Frey, a senior vice president of the
Enterprise Foundation, a national community development
The possibility that HUD may back out of the agreement has raised the
concern that once the agency acquires the buildings — either through
foreclosure or voluntary surrender — it might sell them to real
"That's the one thing we were all worried about — that these things
would be packaged together and dumped, with less of a guarantee that
anything constructive would happen to them," said Mike Gecan, a
senior organizer with the Industrial Areas Foundation, which is
helping the community groups in Brooklyn.
Critics have said that HUD's lax oversight of its 203(k) mortgage
program was partly to blame for the vast scheme to defraud the
housing agency. The participants included real estate speculators,
mortgage bankers, appraisers and obscure nonprofit groups with little
or no housing experience. They were accused of buying buildings and
quickly reselling them at inflated prices, a practice known as flipping,
then pocketing money that was supposed to be used to repair the
The sales were financed under the 203(k) program, which was
intended to foster home ownership in poor neighborhoods, and is
supposed to be available only to nonprofit groups with housing
experience and people who intend to live in their homes. Eighteen
people have been arrested so far.
Under the agreement, HUD said it would direct banks holding the
delinquent mortgages to make sure the tenants were being taken care
of. But in Harlem, where 65 of the brownstones are occupied, 25
tenants have gone without heat and hot water through the winter, said
Adam Weinstein, the director of the Goddard-Riverside Westside
SRO Law Project, a tenant advocacy group. HUD officials say they
have no control over the properties because they do not yet own them.
The lack of heat caused a pipe to burst at 4 Convent Avenue, leaving
tenants there without running water. Mark Tyler, 24, who has lived in
the building for more than two years, said he uses bottled water to
flush the toilet. "I'm ashamed to invite anyone over," Mr. Tyler said.
HUD says that 609 city buildings financed under the 203(k) program
are in default or in foreclosure and that about 40 percent are occupied.
Although the program is supposed to be limited to buildings with one
to four units, more than a quarter of the properties are
single-room-occupancy dwellings, city housing officials said. All
together, the city has found 26,293 code violations in the 203(k)
properties and has spent more than $500,000 on emergency repairs
since 1997, just before the mortgage scandal began.
Mr. Cuomo did not respond to a request for comment. But an architect
of the plan, Matthew O. Franklin, a former HUD deputy chief of staff,
said it was in the agency's interest to honor the agreement. For
example, he said, HUD might incur costly carrying charges while
waiting for the properties to be sold. "This is a good agreement that the
agency was clearly committed to," Mr. Franklin said. "It's good public
policy and an important step toward rebuilding these neighborhoods."
see also: http://tenant.net/Tengroup/Metcounc/Jan01/harlem.html
and also: http://tenant.net/Tengroup/Metcounc/Apr99/harlem.html
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