State Electeds Call On Judicial Branch & De Blasio To Freeze Third Party Transfer Program

Timeline of Third Party Transfer
The Urban Homesteading Assistance Board (UHAB), according to one of the tenants, posted this timeline of Third Party Transfer process by the entrance of the building a few days ago (Photo by Tsubasa Berg)

Editor’s Note: The following is the 15th of a KCP investigative series by reporters Kelly Mena and Stephen Witt on how New York City is taking paid off properties from longtime small property owners, including black and brown seniors, and giving them to connected non-profit and for-profit developers as gentrification sweeps across Brooklyn.

Senator Velmanette Montgomery photographed by tracy collins
Senator Velmanette Montgomery

More than a dozen members of the state’s powerful Black, Puerto Rican, Hispanic, and Asian Legislative Caucus are calling on both the New York State Unified Court System and the De Blasio Administration to put a moratorium on and investigate the 66 properties that were bundled together and taken through in rem foreclosure proceedings and judgment in December 2017.

The city’s Department of Housing Preservation & Development (HPD), through its Third Party Transfer (TPT) program, filed a request for the foreclosure judgement on Nov. 27, 2017, and State Supreme Court Judge Mark Partnow signed a judgement of foreclosure on Dec. 5, 2017.

KCP has found four property owners that produced compelling evidence of improprieties in the seizures of property. All say they received no notification of a court proceeding, and only learned of it after notices of new ownership was sent to tenants in the building. Further all four property owners were either black or brown, owned their properties free and clear with no mortgages and lived in increasingly gentrifying neighborhoods where property values are now worth in the millions of dollars.

The Caucus called for the moratorium and investigation in a Oct. 25 letter sent to de Blasio, the commissioners  from HPD, the city’s Department of Finance (DOF) and the Department of Buildings (DOB). The letter also went out to the Hon. Lawrence K. Marks, Chief Administrative Judge of the Courts New York State Unified Court System, and to the Hon. Janet DiFiore, Chief Judge New York State Court of Appeals

The state lawmakers wrote the investigation should determine at the very least, “whether the actions taken by the New York City Department of Finance (DOF), the New York City Department of Housing Preservation and Development (HPD), and New York City Department of Buildings were in keeping with the letter and spirit of the City’s 1996 Distressed Property laws and procedures; and (2) what is the actual impact of the city’s program on working families and communities of color?”

State Sen. Velmanette Montgomery (D-Bedford-Stuyvesant, Fort Greene, Clinton Hill, Boerum Hll, Red Hook, Sunset Park, Gowanus, Park Slope), who was the chief initiator of the letter, said the KCP stories took up a huge chunk of the Caucus’ recent summit meeting where it was determined that the TPT program is also an issue in the Bronx and Queens.

“More than a dozen people [lawmakers] from across the city agreed to sign the letter. That is how widely it was felt in our Caucus,” said Montgomery.

“The issue of people’s property being taken is critically important to all of us, and as state electeds we wanted to initiate a movement at least among ourselves to see what steps we can take in helping to resolve this problem for people we represent. We will also be talking to borough presidents and city council members. We don’t want to usurp anyone’s authority, but we thought it is extremely important as state representatives to utilize the authority we have to try to rectify this situation,” she added.

The letter goes on to question the city’s current TPT initiative to fulfill a purpose other than that which was intended by New York City Local Law No. 37, as adopted in 1996, and by the authority given by the state to the city to engage in in rem foreclosure proceedings in the prior decade.

“One fundamental question that comes to the fore is whether, or the extent to which, New York City’s 2015 to 2018 transfers of ownership and management of 66 properties pursuant to the December 2017 Kings County judgment, utilizing its distressed property law proceedings, were within the boundaries of the purpose of these proceedings, or whether New York City overreached in its authority to employ the in rem foreclosure method to take title of the properties,” the letter states.

The letter notes that most of the properties taken were in rapidly gentrifying, black and brown communities such as Bedford Stuyvesant, Crown Heights, Brownsville, Bushwick and East New York where displacement of working families and seniors from these communities is at an all-time high

“Homeownership is one of the few opportunities for communities of color to build intergenerational wealth, and regard for property ownership is a fundamental tenet of our State Constitution. A single misstep in a program such as this is one too many when it can result in one of our constituents losing their home, and the families’ equity and investment in such properties, unjustly or unfairly,” wrote the lawmakers.

Besides Montgomery, other Brooklyn lawmakers who signed the letter included State Senators Roxanne Persaud and Kevin Parker; and Assembly Members Nick Perry, Latrice Walker, Tremaine Wright, Diana Richardson, Walter Mosley, Charles Barron and Eric Dilan.

However, the State Court System denies any wrongdoing and believes that the City has to be charged with the responsibility of preserving homeownership across the five boroughs.

“We have nothing to do with New York City’s Third Party Transfer program – you would have to speak with the City. In regards to the in rem foreclosure process, we are solely the venue, the statutes were promulgated by the state legislature and the process [is] the same in every county,” said Lucien Chalfen, the Public Information Officer for the Office of Court Administration.

Neither the De Blasio Administration nor HPD responded to inquiries about the Caucus letter at post time.