In the most recent issue of our sister  newspaper, the Tremont Tribune (covers the neighborhoods of Community Board 6), we report on a troubling trend of over-leveraged landlords finding themselves in hot water in buildings they paid way too much for. Fordham Towers is exhibit #1, but it is only one of many buildings facing, or on the brink of, a crisis.

Advocates who have watched previous waves of unwise lending and irrational speculation wreak havoc on Bronx blocks, saw the trouble coming months and even years ago when purchase prices way exceeded multiples of the rent roll that buyers use, or should use, to gauge sustainability.

“It is a surprise to absolutely nobody who was looking at this two years ago,” housing advocate Dina Levy of the Urban Homesteading Assistance Board told the Tribune.

The reckless lending and purchasing is eerily reminiscent of the late 1980s and early 1990s when the quasi-federal agency Freddie Mac looked the other way while landlords took loans they couldn’t afford on residential buildings, leading to a free-fall in maintenance and foreclosures in scores of residential buildings.

University Neighborhood Housing Program was the first to raise the red flag on Freddie Mac and they regularly have issued reports on troubling housing finance trends over the last several years.

The city, policymakers, and banks must do something to soften the blow that is sure to affect thousands of innocent tenants. And while they are at it, they would do well to listen closely to advocates who have their ears to the ground, resolve to learn from this latest wave of irresponsibility and vow not to let it happen again.
(To read the Tremont Tribune story, go to www.tremonttribune.org.)