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New York homeowners will be able to tap into expanded financial assistance after Goldman Sachs agreed to a $5 billion settlement over its past lending practices leading up to the Great Recession with a mortgage working group led by New York Attorney General Eric Schneiderman.
Hundreds of millions of dollars in settlement funds will be used to help struggling homeowners, particularly through the State’s Mortgage Assistance Program (NYS-MAP), Schneiderman’s office said.
“These dollars will immediately go to work funding proven programs and services to help New Yorkers keep their homes and rebuild their communities,” the state attorney general said in a statement. “We’ve witnessed the incredible impact these programs and services can have in helping communities recover from the financial crisis.”
“We are pleased to put these legacy matters behind us,” Michael DuVally, a Goldman Sachs spokesman told HousingWire. “Since the financial crisis, we have taken significant steps to strengthen our culture, reinforce our commitment to our clients, and ensure our governance processes are robust.”
Under the settlement, $480 million will go toward families and communities in New York State, specifically for mortgage assistance, principal forgiveness, land banks and land trusts, and the creation and preservation of affordable rental housing.
Those funds will also “facilitate a significant expansion” of the NYS-MAP program that has helped hundreds of New Yorkers so far to restructure their debts and keep their homes, Schneiderman’s office said. Since December 2014, NYS-MAP has helped 668 borrowers to avoid foreclosure. Homeowners apply through a partner organization in the Attorney General’s Homeowner Protection Program. The Center currently administers the program on behalf of the Attorney General’s Office. According to the settlement documents, Goldman Sachs agreed to allocate funds for debt restructuring “consistent with the terms and conditions” of NYS-MAP.
The Attorney General’s Office estimates that several thousand more homeowners could avoid foreclosure with the expansion of NYS-MAP due to the Goldman Sachs settlement.
Schneiderman’s office provided this breakdown of the relief under the settlement: $220 million for debt restructuring; $30 million for land banks and land trusts; $30 million for code enforcement; $150 million for first-lien principal reduction; and $50 million for the creation and preservation of affordable housing.
The settlement was negotiated by the Residential Mortgage-Backed Securities Working Group, which previously reached agreements with J.P. Morgan Chase, Bank of America, Citibank and Morgan Stanley.
To learn more about NYS-MAP, homeowners can reach the Center by dialing 311 in New York City and asking for the Center for NYC Neighborhoods or by dialing 855-HOME-456.
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For the second year in a row, many homeowners in New York City and across the country will get hit with another costly increase to their flood insurance premiums starting April 1, 2016, when their policies begin to be renewed. And, for the first time, homeowners in the high risk flood zones whose policies have lapsed for more than 90 days will have to reinstate them at the higher full-risk rate — which could mean thousands of dollars in additional costs.
New Yorkers are particularly affected by the new flood insurance rules under the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act that the U.S. Congress passed in 2014. New York City, surrounded by 520 miles of waterfront, has more residents living in high-risk flood zones than any other city in the United States. Unlike most other coastal communities, the vast majority of New York City’s waterfront homes were built long before the National Flood Insurance Program’s flood maps for New York City were put in place in 1983 and special guidelines for construction were set.
In this year’s guidance about the rate increases, FEMA stated, “It is important to note that nearly 80% of NFIP policyholders are minimally impacted by [Congressional changes to the program].” Unfortunately, in New York City, that ratio is the reverse because of how many older buildings the City has: about 80% of the properties in New York City’s high-risk flood zones were built before the first flood map was adopted and they face the biggest increases in the cost of their insurance.
Here’s a summary of the changes policyholders can expect:
Primary Homes: When you renew your policy for your primary home, your insurance rate could increase by up to 18%. However, unlike last year, homeowners in the highest risk flood zones should only see an increase in their premiums of up to 5%. If your home was substantially damaged in Hurricanes Sandy or Irene, you will see a rate increase of 25% annually until your premium reaches the full-risk rate.
Second Homes & Businesses: If you renew a policy for a second home or a business in the high risk flood zones, your rate will increase by 25% annually until your premium reaches the full-risk rate.
Annual Charge: In addition to this rate increase, you will be charged a “Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) surcharge.” For primary homes, the charge is $25. For businesses and second homes, the charge is $250.
What You Can Do:
If you see increases on your policy that are above the increases outlined here, call your broker and make them explain how they are getting to the new, higher rates.
With the HFIAA surcharge, you will automatically be charged $250 — the second-home rate — unless you prove the home is your primary home. You will receive a notice from your agent that will require you to submit proof.* If you do not provide this documentation within 30 days of the date of the notice, you will be charged $250 per year.
Learn more at the Center for NYC Neighborhoods’ flood insurance website, FloodHelpNY.org. It’s New York’s go-to source for everything you need to know about flood insurance and your flood risk. Have questions? Call our Homeowner Hotline at 646-786-0888.
*Driver license, automobile registration, proof of insurance for a vehicle, voter registration, documents showing where your children attend school, or homestead tax credit form for primary residents.
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Keeping seniors in their homes is one of the next big challenges for housing advocates.
Seniors are among the fastest growing populations in New York, and many are homeowners. But they face unique challenges: their housing stock is aging, requiring costly repairs, and they may need retrofits to allow them to “age in place,” such as no-step showers and wheelchair-accessible entrances. A further challenge for senior homeowners is that they often rely on fixed incomes to get by. In this context, affordable housing is a critical need for those who who want to retire in the communities where they’ve lived for years or decades.
The number of seniors in New York City is expected to grow from 1.2 million to 1.8 million over the next 15 years. In response, the Center, along with five community-based partner organizations, is piloting a program to coordinate services to help senior homeowners. Our goal is to raise awareness, build partnerships and minimize service gaps, while focusing on isolated seniors and linking them to resources before they face a crisis.
This is only the start of a long-term effort to address the needs of senior homeowners that must also include legal services for bankruptcy, deed theft prevention and estate planning, as well as financial counseling and repairs.
Fellow housing advocates are also working at the state level to address seniors’ needs.
Enterprise Community Partners, for instance, is calling for the State to allocate funding in this year’s budget for a new Senior Affordable Housing Program that would invest $50 million over five years on new senior housing; $4.5 million for rental assistance for low-income families in private housing; and $10 million for coordinators to help seniors age in the homes of their choice.
Judi Kende, vice president and New York market leader at Enterprise, wrote in the Albany Times-Union earlier this month that even as housing costs have increased, social security payments (often the only source of income for low-income seniors) have not kept pace.
“These statistics are more than numbers; they are our parents, our grandparents, our neighbors,” Kende wrote.
Image credit: Flickr / Chris Goldberg
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In a previous blog post, we showed how nearly a decade after the Great Recession many black homeowners in the city owe more on their mortgages than their property is worth. Homeowners in these “underwater mortgages” are unable to begin to build wealth and are more likely to end up in foreclosure.
This time, we’ve taken a look at home sale prices, again finding stark racial and ethnic disparities. In this case, prices have rebounded since the recession in majority white and Asian neighborhoods, but not so in majority Hispanic and, most markedly, black neighborhoods. While the luxury market (until recently at least) has been soaring, particularly in Manhattan, and bidding wars regularly break out in gentrifying areas of central Brooklyn and western Queens, other neighborhoods with predominantly black homeowners show values that are below 2004 levels.
The following chart captures the heart of this story: Forty-six percent of black homeowners live in ZIP codes where the median home value has decreased since 2004. Another 26 percent live in ZIP codes where home values have only marginally increased, giving owners a meager gain in equity for 10 years of ownership.
So what does this mean for housing policy in the city? Homeownership remains one of the best avenues for wealth creation; however, there is a tension between affordability and equity accumulation. When property values in a neighborhood rise too quickly, it can lead to speculation and displacement of longtime residents. But when property values crash and then rebound slowly, as in neighborhoods like Wakefield in the Bronx and Jamaica, Queens, many homeowners struggle to pay their mortgages and are unlikely to have the option to move, even if they wanted to.
These patterns in predominantly black homeowner neighborhoods, and to a lesser degree in Hispanic majority neighborhoods, did not develop in a vacuum. Starting in the 1930s, extensive redlining by the federal government effectively stopped lenders from issuing mortgages in predominantly non-white neighborhoods. Redlining was followed by racial steering and blockbusting that largely determined where non-whites were able to purchase homes. Later, with the arrival of blacks and Latinos, those areas –including southeast and central Queens, central and eastern Brooklyn, and much of the Bronx — were part of the national “white flight” phenomenon, with corresponding municipal disinvestment as neighborhoods shifted.
Today, homeowners in these same neighborhoods are struggling to get reasonable loan modifications and stave off foreclosure. Through its network of over 30 community-based partners, the Center has helped coordinate free, high-quality housing counseling and legal services for hundreds of those residents through the New York State Attorney General’s Homeowner Protection Program.
So what can policymakers do to support stable and affordable homeownership for these households in the years to come?
For one, it’s time for widespread principal reduction modifications by Fannie Mae and Freddie Mac. The majority of housing economists believe that principal reduction is the most effective solution for resolving mortgage distress for underwater homeowners. While the Federal Housing Finance Agency, which oversees those quasi-governmental institutions, has announced plans to implement a principal reduction pilot that will serve a very small portion of underwater homeowners, details on the program are not yet public and it’s unclear how New York City homeowners may benefit.
In the meantime, the Center, through its affiliation with the Coalition for Affordable Homes, has been advocating for city and state funding to purchase distressed mortgages at a discount and to pass on the write-downs in the form of principal reduction. Unfortunately, the Federal government has, for the most part, focused on selling distressed mortgages to deep-pocketed investors seeking to maximize profit.
Image credit: Flickr / Marques Stewart
Chart Sources: DOF Rolling Sales, Census ACS 5-year estimates 2010-2014. ZIP codes for which there were insufficient 1-4 unit home sales data were excluded from this analysis. Those ZIP codes are primarily in Manhattan below 120th street and above 153rd street. Outer borough ZIP codes excluded for the same reason are 11697, 10451, and 11359.
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The City has published its 60-day lien sale list for 2016, and the good news is that the numbers keep falling. This was an expected outcome, given that many homeowners will likely enter into a payment plan or have their properties taken off the list by the City before this year’s sale on May 12. However, there are thousands of properties still facing liens.
Related: How to protect your home from the tax lien sale | Spring is tax lien season in NYC, when unpaid debts blossom into burden for homeowners
Over 3,000 buildings were removed between the publication of the 90- and 60-day lists; over 1,600 were one-to-four family homes, the ones that the Center works to protect. The largest declines were in the 8th Council District, represented by Speaker Melissa Mark-Viverito; the 48th district represented by Chaim M. Deutsch; and the 33rd district represented by Stephen Levin.
Check out the updated tracker below to see how the numbers have changed.
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Many middle-class homeowners in New York City miss out on an annual property tax break of about $300, and time is running out to apply this year.
The New York State School Tax Relief Program (STAR) exemption gives homeowners a tax break of about $300 per year, and it’s helped thousands of New Yorkers keep homeownership within reach. In 2011, eligibility for the tax break was narrowed to people with incomes of less than $500,000.
STAR is something that middle-class homeowners should know about: It’s easy to apply for, and there’s even an “enhanced” STAR program that comes with an approximately $600 tax break. The deadline to apply for either the basic or enhanced STAR is March 15, 2016 — so hurry up.
Here’s more information from the New York City Department of Finance on how to apply.
Need more help? Give us a call at 646-786-0888.
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Thousands of homeowners in the five boroughs may be surprised to know their outstanding debts to the City will soon be sold to private investors. The City’s annual tax lien sale on May 12, 2016, can be lucrative for both the government and investors — but it can also be devastating for many homeowners.
Purchasers of tax liens can tack on fees and levy daily compounding interest rates of up to 9% for properties worth less than $250,000 or up to 18% for more expensive properties. For the City, the sale is a quick way to raise cash.
Yet for homeowners, initial debts as small as $1,000 — from unpaid property taxes or water charges, or emergency repairs — can blossom into much more burdensome amounts that can spiral out of control. If a homeowner is unable to pay, the purchaser of the lien can even foreclose and sell off the property at auction.
In 2014, 2,729 tax liens were sold for one-to-three family homes, with an average debt owed of $12,000. But an analysis of tax lien payoff statements submitted to us by Network Partners over several years showed the average amount owed to private investors after added fees and interest was $27,365 — more than double the cost of the initial tax liens in some cases.
The burden is clear for homeowners, as the case of Augustine McDowell of the Bronx demonstrates: After being laid off from his job in 2010, he tried to get by with the rent from his tenants but they too became delinquent on their payments and Mr. McDowell fell behind on water charges. That initial debt of $27,000 was sold off, and by Christmas Eve 2015 it had increased to over $42,000; only an emergency loan from the New York State Mortgage Assistance Program, funded by the New York Attorney General’s Office and administered by the Center, kept him from losing his home to foreclosure.
As McDowell’s case demonstrates, it’s often the unemployed, elderly, or other people at risk financially who ultimately take the biggest hit in the city’s tax lien sale.
Officials with the Department of Environmental Protection testified to the City Council in 2015 that its sale of water and sewer liens generates $100 million in revenue that is essential to supporting its operations. An official with the Department of Finance said that tax lien sales allow the agency to collect unpaid property taxes and charges, and “ensures fairness and equity among property owners.” The agency said it had collected $1.3 billion from tax lien sales since 1996.
The Center, like many members of the Coalition for Affordable Homes, has proposed that so-called tax class one properties (one-to-three unit buildings) be exempted from the lien sale. In 2014, tax class one properties represented $34 million in debts out of a total $115 million. Given the high repayment rate (more than 60% of property owners with liens sold between 2009 and 2011 repaid their debts, according to the NYC Independent Budget Office), many advocates believe that keeping these debts in City payment plans, rather than handing them over to private investors, would keep vulnerable residents like seniors from serious financial turmoil or homelessness.
The tracker below shows where the properties on the 2016 tax lien sale list are located.
The above 60-day list will be whittled down and republished at the 30-day mark before the sale. Many property owners will be able to remove themselves from the lien sale by paying their debt in full, entering into a payment plan with the City, or applying for an exemption from the lien sale.
But that will still leave thousands of homeowners on the list facing debts they may quite possibly never be able to repay once high interest and fees accrue, which could even put them at risk of foreclosure.
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Here’s a look at the best stories on homeownership and housing from the past week that got our attention. Did we miss anything? Let us know in the comments section.
On Monday, reporter Kirk Semple of The New York Times took a look at overcrowding in the city and found that it had gotten exponentially worse:
According to the latest Census Bureau data, about 9 percent of all households — or nearly 280,000 units — in New York City have more than one person per room, a common government measure of crowding. A decade ago, the rate was 8 percent. The change represents nearly a 13 percent increase. By comparison, the national crowding rate is 3.4 percent.
The crowding problem in New York worsens considerably in specific neighborhoods, particularly those with large working-class and immigrant populations where it is not unusual for two families to cram into apartments intended for one, and laborers to sleep two, three or more to a room.
On the same day, Sally Goldenberg of Politico New York reported on the “senior housing crisis” with powerful anecdotes to uncover a brewing crisis for those people who find themselves challenged by aging, mobility and life on fixed incomes:
A recent study by the non-profit advocacy group LiveOn NY found 101,936 people age 62 and older are waiting an average of seven years for slots in 119 buildings that provide rent-regulated apartments across the city.
The researchers for the study, titled “Through the Roof—Waiting Lists for Senior Housing,” only received responses from 43 percent of the 276 buildings in the federally-subsidized housing program it surveyed, leaving the organization to project that wait lists for low-income senior apartments likely exceed 200,000 people in the city.
The population of elderly people in the five boroughs is big and growing, and the shortage of federal funding to cover the cost of building homes for them is stark.
Over at CityLab, Ellie Anzilotti took a deep dive last weekend into the history of affordable housing in New York:
Affordable housing in New York is inseparable from its long and complicated history. “It’s a layered, sedimentary system,” says Nicholas Dagen Bloom, a social science professor at New York Institute of Technology. Developments from each decade dating back to the turn of the 20th century exist now alongside each other, governed and financed through myriad means. When it comes to affordable housing, there is no one story to tell.
On Tuesday, Nathan Vardi at Forbes gave us a portrait of John Grayken of Lone Star Funds, one of the most divisive figures in “distressed investing”:
Since the Great Recession Grayken has made a specialty of buying up distressed and delinquent home mortgages from government agencies and banks worldwide. He’s also picked up a major payday lender, a Spanish home builder and an Irish hotel chain. Regulators hassle him, and the homeowners whose mortgages he owns or services despise his tactics. In fact, he has become accustomed to taking shots from detractors and has been the subject of protests from New York to Berlin to Seoul. Last year New York Attorney General Eric Schneiderman reportedly opened an investigation into Grayken’s heavy-handed mortgage-servicing tactics, including aggressive foreclosures, which have unleashed widespread outcries from homeowners, housing advocates and trade unions.
There are real questions about the human costs of Lone Star Funds’ business practices,’ says Elliott Mallen, a research analyst for Unite Here, a union representing 270,000 hotel and industrial workers.
Finally, The Atlantic’s Gillian White interviewed Matthew Desmond, author of the new book “Evicted: Poverty and Profit in the American City,” on how removing people from their homes can exacerbate cycles of poverty:
Desmond: The face of the eviction epidemic is moms and kids, especially poor moms from predominantly Latino and African American neighborhoods. We found that about one in five African American women renters report being evicted at some point in their lives. The equivalent is about one in 15 for white women renters. So there’s an enormous discrepancy.
Image Credit: Flickr / Nick Normal
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The Federal government is seeking to crack down on money laundering by unmasking individuals behind large all-cash purchases of Manhattan real estate by shell companies. For the next six months, through a new pilot program, the U.S. Treasury Department will require companies to disclose the names of individuals behind all-cash purchases of more than $3 million by LLCs.
While the new transparency requirements for limited liability companies are a positive development in the face of international money laundering, the program’s focus on the highest-end real estate neglects the New Yorkers we work with at the Center: those who own, or desire to own, more modest homes, largely in boroughs outside of Manhattan. These homeowners are among those most harmed locally by the rise in the use of shell LLCs in New York City real estate deals.
According to WNYC, all-cash LLC sales now comprise more than 10 percent of all residential condo and single family home sales in the five boroughs. For would-be first-time home purchasers, who almost always require a mortgage, it is increasingly difficult to compete in such a market.
LLCs play an even more corrosive role: they are used to perpetrate foreclosure rescue and deed theft scams that harm the City’s middle- and working-class homeowners. As we documented in our report, Who Can You Trust?, scammers actively target homeowners at risk of foreclosure, relying on the anonymity of LLCs to evade detection and responsibility for their crimes. These scammers seek to defraud homeowners looking for help with their mortgage by stealing their money or even the deeds to their homes — a trend that is accelerating and becoming more sophisticated with the booming real estate market.
The New York Times, which scrutinized the role of LLCs in home scams last fall, profiled several homeowners who were tricked into signing over the deeds to their homes, including Ozella Campbell, an elderly, disabled Bedford-Stuyvesant homeowner who lost her family’s brownstone to an LLC with a Great Neck, N.Y., address. However, no company by that name exists there, and Campbell’s relatives cannot reach the company’s owners. Ms. Campbell is stuck with an overdue $529,000 mortgage and now lives in an unheated, illegally converted garage in Canarsie, Brooklyn.
When scammers hide behind the LLC structure, it becomes extremely difficult for homeowners to undo wrongs committed against their property or to seek justice. Often it is impossible to even identify the individuals affiliated with the LLC. For example, one homeowner in the Times story discovered that the deed to her home had been fraudulently transferred to an LLC that listed her home address as its address. And even when homeowners are able to take their cases to court and to win judgments against LLCs, the individuals perpetrating the scam can simply dissolve the corporation and evade liability, while continuing to operate under a new corporate entity.
The abuse of the LLC structure is not only a problem in New York: A recent CityLab piece details how LLCs in Detroit fail to pay taxes on a property and then form a new entity to repurchase the same property at auction at a fraction of the debt owed.
If the Treasury is going to take a stand against faceless LLCs dealing in luxury condos in Manhattan, they should also look out for some of our most vulnerable citizens. While there are plenty of legitimate reasons to employ the LLC structure, our government has a responsibility to take all steps necessary to increase transparency and keep out the bad actors, whether they be oligarchs from abroad or scammers from the next county over.
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Forty-five members of Congress — including several U.S. Representatives for New York — have signed on to a letter calling for changes to how bulk sales of distressed properties are sold by federal housing agencies, including disqualifying “bad actors” and making the programs more transparent.
The letter, sent on Tuesday and addressed to the heads of the U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency, calls into question how the sales of troubled mortgages have been handled and the impact those sales have had on neighborhoods and communities. U.S. Reps. Hakeem Jeffries, Carolyn Maloney and Yvette Clarke were among the signatories from New York.
“We are concerned that this approach represents a huge missed opportunity to prioritize neighborhood stabilization, help alleviate the affordable housing crisis in communities across the country, and to work with organizations that have a track record of preserving homeownership,” the letter reads.
However, the letter praises the move by the FHA to do non-profit-only auctions as a “step in the right direction.”
The letter details recommendations for redesigning how troubled mortgages are packaged and sold.
You can read the full Congressional Letter to Watt and Castro.