For one thing, the rats move in.
Foreclosure came to 553 East 169th Street in the Bronx in November of 2010. No doubt hundreds of other dwellings nationwide were foreclosed on that month, contributing to the raft of vacant, unkempt single-family homes with which so many cities are now stuck. But 553 East 169th Street isn't empty. Eighteen families still live there. As renters, New York law allows them to stay put, since they weren't the ones who had a problem with the bank. Their landlord did.
These people – the renting tenants of foreclosed apartment buildings – are among the least-recognized casualties of the housing crisis.
“These are individuals who have never once taken out a loan,” says Celia Weaver, an organizing and policy advocate with the Urban Homesteading Assistance Board in New York.
New York City has the highest renter rate in the country, with 69 percent of all households renting, and so the mess of foreclosed multi-unit residences is particularly ugly here. Between January of 2010 and December of 2011, Weaver says more than 400 multi-family buildings fell into foreclosure in the city, mostly in central Brooklyn and the Bronx, affecting about 6,600 apartments. Some of these buildings are as small as six units, others as large as a hundred.
So what eventually happens to properties that still have tenants but no permanent owners? For starters, the rats move in.
“Huge rats,” Weaver says, because there's no one to pay the exterminator. “It’s quite insane actually. Ceilings are falling down. There are big mold issues. There are security problems – doors will be broken, and people can just walk right in from the street. In some cases, the receiver doesn’t have the money to pay for the heat and hot water.”
Buildings that have gone into foreclosure are transferred to court-appointed receivers (read: “politically connected lawyers,” Weaver says). They’re charged with collecting rent and making repairs. But the reality is that most of these apartments, built in the 1920s and '30s, began falling apart long before a receiver showed up. Landlords in fear of foreclosure, after all, are more likely to funnel rent checks at mortgage payments than leaky roofs. And a temporary receiver isn’t motivated to make long-term investments in a property, like say a new boiler or broken ductwork.
“They’re not good at maintaining these buildings,” Weaver says. “That’s not really their goal. They don’t own the property. So there’s basically no accountability.”
In August of 2011, 553 East 169th Street had 84 code violations. Now, it has 285, ranging from broken window guards to peeling lead-based paint. And research suggests deteriorating buildings like this can even drag down a whole neighborhood.
Weaver’s organization has been working with the tenants here and in other buildings in the city to find responsible new owners (perhaps the tenants themselves?) and to push banks into taking financial responsibility for maintaining these places in the meantime. A lot of these buildings originally went into foreclosure, even though they house rent-paying tenants, because they were overleveraged at the height of the housing boom by speculators who hoped to drive out rent-regulated existing tenants in favor of newer ones who could be charged much more.
“So much of the news around this foreclosure crisis has been focused on getting low-income homeowners the opportunity to get back into their homes,” Weaver says. “This is not exactly what we’re fighting here. We don’t want to get the building back to the slum lord who speculated it.”
Both images from foreclosed multi-family apartments in New York courtesy the Urban Homesteading Assistance Board.