On the heels of the Voice‘s “10 Worst Landlords” series, tenants in 10 foreclosed buildings in the Bronx run into the ground by dishonoree Milbank Real Estate are going to court with a new strategy that directly targets Wall Street.
Backed up by local pols, they’re asking a judge today to force mortgage-holder Wells Fargo itself to take direct responsibility for, and shell out millions to fix, nearly 4,500 housing code violations.
The buildings are in foreclosure proceedings in Bronx Supreme Court after Milbank, run by L.A. brothers Aaron and Solyman Yashouafar, defaulted early last year on a $35 million mortgage. A court-appointed receiver is operating the buildings. But they have slid further into decay, say sources close to the situation, because Wells Fargo isn’t forking up the cash to maintain them even at their previously poor level.
“The Milbank tenants have suffered the consequences of Wall Street’s reckless lending practices for too long,” Jonathan Levy, deputy director of the Legal Services-NYC Bronx Housing Unit, says. “The lenders must be held accountable for the costs of repairing the damage.”
City Council Speaker Christine Quinn, Bronx Borough President Ruben Diaz Jr., and Council Member Fernando Cabrera conducted a press conference today with the tenants, their advocates at the Urban Homesteading Assistance Board, and their lawyers.
The new strategy, in this case a motion that’s part of the foreclosure proceedings, could have wide-ranging impact on other overextended landlords that were able to get loans from reckless banks. If the court “holds the bank responsible,” a Times story says, “the move could discourage other banks from entering foreclosure proceedings on other properties, leaving buildings to sink deeper into limbo.”
The Milbank buildings could hardly sink any deeper. The buildings are “unlivable,” tenants say, and the Voice’s own on-site inspection backs that up.
The mortgage holder is technically a $3 billion commercial mortgage-backed security trust controlled by Wells Fargo and loan-servicer LNR Partners Inc. After Milbank defaulted, the trust started foreclosure proceedings. The Yashouafar brothers held the buildings for barely two years before defaulting on their loan. They also own other buildings in the Bronx.
A few months ago, Joe Cicciu, the court-appointed receiver, told the Voice, “It’s triage, you know? I almost feel like I’m on a battlefield with the wounded coming in. Not everyone is shot up, sometimes these are only flesh wounds. So we go to some of those apartments and try to fix things, patch things up, to give people a chance to live in decent apartments. But for people with the collapsing ceilings, we are trying to relocate them into vacant units. The problem is, most of the vacant units need a gut renovation! And we don’t have the dollars for that anymore.”
This new court action doesn’t name a dollar figure, but Cicciu previously told the Voice, “If we’re talking about bringing the buildings up to the quality that they are supposed to be, then we’re talking about tens of millions of dollars.”