FOR IMMEDIATE RELEASE
June 24, 2004
Carol Abrams (212) 863-5176 for HPD
Adam Glantz (212) 264-1100 for HUD
NYC HOUSING COMMISSIONER AND FEDERAL HOUSING OFFICIALS ANNOUNCE PROGRESS ON PARTNERSHIP TO PRESERVE AFFORDABLE HOUSING FOR 1,500 FAMILIES AND CREATE HOUSING FOR 700 MORE
New York City Housing Commissioner Shaun Donovan and U.S. Department of Housing and Urban Development Regional Director of New York and New Jersey Marisel Morales today announced significant progress on a 2001 joint plan to save affordable housing for 1,500 families that had fallen prey to unscrupulous lenders and nonprofit organizations in Manhattan, Brooklyn, Queens and the Bronx. The City and Federal government formed an unprecedented partnership to invest nearly $168 million over five years to rehabilitate over 500 occupied and vacant multi-family properties that were sold under HUD's 203(k) mortgage insurance program. To date, rehabilitation at more than 76 buildings with 347 units is underway or completed; 258 properties with 1,306 units are ready to be conveyed to designated developers.
"The progress we have made on rehabilitating these 203(k) buildings is fundamental to the City's overall revitalization efforts in these neighborhoods, " said Housing Commissioner Donovan. "We saw the devastating effect these neglected buildings were having on communities across the City where we had made significant investments in housing. Together, the City and HUD are preserving hundreds of buildings that will house future generations of New Yorkers."
"This unique and unprecedented partnership among HUD, the City, and private developers will fulfill two very important objectives: give hundreds of New York City residents the opportunity to become homeowners and spur neighborhood revitalization and economic growth across New York City's boroughs," said HUD Regional Director Morales. Key components of the plan include:
- HUD has been acquiring many of these properties upon foreclosure and working with the City's Department of Housing Preservation and Development (HPD) to restore, market and sell the properties through programs modeled after successful existing city programs;
- HUD and HPD expect to repair 2,200 dwelling units with this joint plan (1,500 occupied and 700 vacant);
- HUD has committed $130 million in development funds and $7.7 million in anticipated sales proceeds to fully rehabilitate the properties to meet New York's housing code;
- HPD is leveraging $30 million in private sector development funds. The city also intends to provide $95 million in tax abatements to purchasers and developers;
- HUD is paying for any relocation expenses for families required to move during renovation;
- Targeting existing residents to purchase wherever possible.
This comprehensive plan, as outlined above, is transforming properties neglected by those who abused the Federal Housing Administration's (FHA) 203(k) mortgage insurance program. The plan specifically addressed the multi-family properties that were sold under HUD's 203(k) mortgage insurance program. The properties were sold to 54 non-profit organizations in 1998 and 1999, generally at inflated prices. In 1999, HUD began uncovering the unscrupulous lenders, appraisers, developers and not-for-profit groups who were looting mortgages insured under this program. Its findings regarding fraudulent mortgage activity were referred to HUD's Inspector General (IG) for criminal investigation. To date, there have been 23 arrests and 13 individuals have plead guilty.
The 203(k) program was designed to enable homebuyers to finance the cost of purchase and rehabilitation through a single mortgage. This program may also finance the rehabilitation of a home for its current owner. HUD has implemented new procedures to prevent abuse through more aggressive lender monitoring and requiring all participating non-profit organizations to undergo a rigorous certification process. HUD is also limiting the number of properties any participant can own to ten.
The announcement took place at 205 Macon Street, a former 203(k) building in the Bedford-Stuyvesant neighborhood of Brooklyn. It is part of a 10-building cluster that was rehabilitated by Pratt Area Community Council (PACC), a local not-for-profit housing organization through HPD's Neighborhood Homes Program. Under the Neighborhood Homes Program, HPD conveys occupied one- to four-family buildings to selected community-based not-for-profit organizations for rehabilitation and eventual sale to owner-occupants. Sale prices of the 10 three-family homes (30 dwelling units total) rehabilitated by PACC in this cluster ranged from $201,000 to $392,000. The homes were sold to low- and moderate-income families. The buyer of 205 Macon Street, Norleen Noble, is a long-time resident of Brooklyn who works in administration at Brookdale Hospital, one of Brooklyn's largest medical centers. She attended homebuyer workshops run by the Pratt Area Community Council and opened a special homebuyers savings account at HSBC Bank. Enterprise Foundation provided $2.2 million of construction financing for this cluster.