NEW YORK -- City politicians are calling on federal regulators to start making use of a little-known provision in the sweeping financial reform bill passed last year that could help protect housing for low-income residents.
Local politicians, residents and housing activists gathered outside a dilapidated Bronx building Thursday to launch the opening salvo in a battle against New York State's biggest savings and loan -- which, they say, is exacerbating the growing threat to affordable housing in New York City.
New York Community Bank has been accused of trying to profit from the seizure of foreclosed apartment buildings in the area, selling the buildings at prices reminiscent of the height of the housing boom. But property prices have taken a hit, and tenants say conditions at the buildings -- run-down even during the market's flush years -- have deteriorated further.
The bank's representatives did not respond to calls for comment.
Politicians have accused the bank of trying to claw back every penny of the bad mortgages it initiated while the housing bubble inflated, regardless of the consequences.
"Instead of selling them at the price that they're worth, making it clear that major repairs need to be done, New York Community Bank was only trying to make a quick buck," New York City Council Speaker Christine Quinn said, adding that regulators like the Federal Deposit Insurance Corporation should examine the "inflated fake numbers faceless, greedy bankers use to make a profit."
A provision in the Dodd-Frank financial reform bill passed last year calls on federal agencies to protect apartment buildings in foreclosure. Politicians said they are still unsure what form the provision will take, but said the law gave the FDIC the power to intervene in bad deals.
Specifically, Quinn said, the FDIC should force New York Community Bank to disclose its finances and the buildings' repair costs.
At the height of the financial crisis, roughly 100,000 apartments in low-income neighborhoods in New York were bought by investors who planned to raise the rents or flip the properties, according to affordable housing advocates. Many of the apartment buildings fell into foreclosure, leaving tenants in limbo -- a situation politicians tried to address in the financial reform bill.
Long-term residents of the Bronx brought their neighborhoods back from the ruin of the 1970s and 1980s, only to watch speculators and banks make a quick buck then walk away, according to Ruben Diaz Jr, the borough's president. "It's downright criminal," he said. "We're calling on the FDIC to stop New York Community Bank from profiteering at the expense of Bronxites, all while their buildings fall apart around them."