Rep. Meeks & Members of NYC Delegation Send Letter to HUD and FHFA to Protect Homeownership for New Yorkers
WASHINGTON, D.C. – (RealEstateRama) — This week, Senior Member of the House Financial Services Committee, Congressman Gregory W. Meeks (NY-05), led eight Members of the New York City congressional delegation in sending a bipartisan letter [letter below] to the U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency urging the agencies to completely stop and revamp bulk sales of distressed properties.
“Bulk sales of distressed properties conducted by the Federal Housing Administration are causing major harm in New York City, and in my district in Queens, NY,” Congressman Gregory W. Meeks said. “Families are being evicted from their homes through foreclosures without any notice, even while they are still working on mortgage remediation options with their lenders. More alarming, the data shows that these sales are having a disproportionate impact on communities of color, with certain inter-generational consequences for families and neighborhoods.”
Congressman Gregory W. Meeks continued, “Earlier this week, I led a letter with many of my committed colleagues in the New York congressional delegation urging the housing agencies to completely stop and revamp their bulk sales of distressed properties. Such initiatives must focus on homeownership preservation and community stability, and not solely on seeking the highest bids from investors preying on distressed borrowers”.
“We have to continue to protect and support the American dream of homeownership,” notedCongressman Gregory W. Meeks.
“Every family deserves a quality and affordable home and I am proud to join Congressman Meeks and our colleagues to help those who have not yet recovered from the devastating foreclosure crisis,” Congressman Charles B. Rangel (NY-13) said. “We urge government agencies to prioritize foreclosure prevention, neighborhood stabilization, and the preservation of affordable housing for these communities who need it most.”
“The bulk sale of distressed properties by the Federal Housing Administration must stop immediately. Hundreds of NY families are unfairly facing the loss of their home. Even more concerning is the fact that these sales are having a disproportionate impact on communities of color,” said Congressman José E. Serrano (NY-15). “FHA shouldn’t be selling mortgages to investment firms whose only interest is squeezing as much profit as they can out of homeowners, even if it means immediate foreclosure. I join Rep. Meeks and rest of my colleagues from the NY delegation in urging the Federal Housing Administration to put a hold on the sale of distressed properties until the needs of tenants are properly taken into consideration.”
“I am pleased to join Congressman Meeks on this important letter. We need to ensure that bulk sales of distressed assets are not unnecessarily forcing people out of their homes, and that the goal of federal policy is to keep people in their homes first,” Congresswoman Carolyn B. Maloney (NY-12) said.
“Bulk sales of distressed properties are a bad deal for working families and serve to weaken our communities,” Congresswoman Nydia M. Velázquez (NY-07). “It is important that FHA rethink this program and put homeowners before profits.”
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The following Members of the NYC congressional delegation signed onto the letter: Congressman Charles B. Rangel, Congressman José E. Serrano, Congressman Jerrold L. Nadler, Congresswoman Carolyn B. Maloney, Congresswoman Nydia M. Velázquez, Congresswoman Yvette D. Clarke, and Congressman Hakeem S. Jeffries.
Hon. Julian Castro, Secretary
U.S. Department of Housing and Urban Development
451 7th Street, SW
Washington, DC 20410
Hon. Melvin L. Watt, Director
Federal Housing Finance Agency
Constitution Center
400 7th Street, SW
Washington, D.C. 20024
Dear Secretary Castro and Director Watt:
As members of the New York City Congressional Delegation, we are writing to urge your immediate intervention in the bulk sales of distressed properties conducted by the Federal Housing Administration (FHA) and the Government Sponsored Enterprises, Fannie Mae and Freddie Mac (“GSEs”). Recently compiled data from the 2012-2014 sales in New York City revealed disproportionate impact on communities of color, with devastating inter-generational consequences for families and neighborhoods.
As recently as last March, many of us signed onto a letter led by Congressman Michael E. Capuano expressing to your respective agencies our great concerns about the structure and impact these sales have in our communities. Although both of your agencies have recently announced changes to their bulk sales programs to increase favorable outcomes for borrowers and local communities, these steps are clearly inadequate to address a spiraling second foreclosure crisis in predominantly Black and Hispanic populations. Local community-based organizations in our districts have reported that many victims of HUD’s Note Sale Program were eligible for FHA’s various modification programs and had not exhausted their loss mitigation remedies when their notes were sold unexpectedly and without notice.
We urge you to fundamentally rethink the long-term social and economic consequences of these programs, which place highest priority on short-term financial gains achieved in bundling up hundreds or thousands of properties at a time for sale to the highest bidder. As the data is beginning to reveal, we are convinced that this approach represents a huge missed opportunity to prioritize neighborhood stabilization and long-term economic inclusion.
As indicated in previous correspondence, there are certain fundamental improvements that FHA and the GSEs must make to these programs to better align them with the goals outlined above.
Firstly, we urge your agencies to prioritize the purchasers that commit upfront to foreclosure prevention efforts, including quality loan modifications and property disposition strategies that promote affordable housing. These approaches bring real benefits to communities in which these properties are located, and should be factored into bids offered in lieu of higher priced bids. There are real social and economic costs that cannot be ignored when hundreds of families are displaced and entire communities destabilized. Your agencies cannot continue to discount as immaterial the immense impacts on our local economic systems and our social fabric.
Secondly, we urge you to disqualify the participation of entities that pay lip service to legitimate loan modification requirements while engaging in unfair or abusive practices towards borrowers. These actors must not be allowed to use government programs to profit from the continuing legacy of the financial and foreclosure crisis.
Thirdly, we are concerned that our city government, housing agencies, and community groups were not consulted in any meaningful way as to how these programs should be structured, and what impact bulk sales could have in their jurisdictions. These institutions have built up decades’ worth of experience and local partnerships that are essential in improving the impacts of these programs on the ground and addressing the issues we have raised here.
Finally, we request that you institute a policy requiring servicers to provide adequate notice to homeowners before a loan can be sold. Selling homeowners’ loans without warning goes against the minimum standards of decency that are expected from a government-backed agency. This practice must end immediately.
As you take steps to improve these programs, we urge you give substantial preference to the preservation of affordable homeownership and rental housing. Maximizing sales to purchasers and non-profit groups with a track record of preserving homeownership, stabilizing neighborhoods, and creating sustainable affordable and mixed-income housing opportunities is key to achieving these goals in the long run.
Sincerely,
Gregory W. Meeks
Member of Congress
