Multifamily Foreclosures and Over-Mortgaging in NYC

Posted under Resources on February 10, 2012

From Citizens Housing and Planning Council and Enterprise:

The Impact of Multifamily Foreclosures and Over-Mortgaging in Neighborhoods in New York City, a study conducted by Citizens Housing & Planning Council and funded by Enterprise Community Partners, examines more than 1,100 multifamily buildings across Brooklyn, Bronx, Manhattan, and Queens. It highlights the need to monitor multifamily housing stock and coordinate public and private sector intervention so that the stock may be improved, returned to responsible owners, and preserved for another generation of tenants.

“Our study suggests that proximity to an over-mortgaged building increases the likelihood of increased code violations, with New York City’s Department of Housing Preservation and Development (HPD) stepping in to carry out additional emergency repairs,” said Harold Shultz, Senior Fellow, CHPC. “As a result, the city should continue its efforts to closely monitor and prevent deterioration in those communities troubled by over-mortgaged multifamily buildings.

“Enterprise commissioned this study to be the first of its kind to examine the effects of over-mortgaged and foreclosed-upon multifamily buildings on the surrounding neighborhood,” said Abby Jo Sigal, Vice President and New York Market Leader, Enterprise. “Thousands of affordable homes for low-income New Yorkers are in physical and financial distress, and the study’s results reveal a clear correlation between these failures and the decline of surrounding neighborhood buildings. Enterprise, with our partners, will continue to tackle the problem of overleveraged buildings to preserve New York City’s affordable housing and to revitalize and stabilize our neighborhoods.”

Additional findings from the study include:

  • For buildings within a 500 foot radius of an over-mortgaged building, the average percentage increase in ERP liens per building was 198%. However for buildings outside of the 500 foot radius, the average percentage decrease in ERP charges was 39%.
  • Buildings within a 500 foot radius had $1,892,142 more in ERP charges in 2010 than they would have had if they were not near an over-mortgaged or foreclosed property.
  • The average per building percentage increase in Class C housing code violations, the most serious, was 13.7% between 2008 and 2010 in buildings located within 250 feet of an over-mortgaged building. The average increase per buildings outside of a 250 feet radius was only 6.3%.

The data for analysis was provided by Local Initiatives Support Corporation and the Urban Homesteading Assistance Board, whose work was made possible through a grant from the Charles H. Revson Foundation, as well as the University Neighborhood Housing Program’s Building Indicator Project database. Additional data was provided by the NYC Department of Housing Preservation and Development.

Click here for more information or to download The Impact of Multifamily Foreclosures and Over-Mortgaging in Neighborhoods in New York City.