The mortgage foreclosure crisis ravaged communities through New York City, and its impact is still being felt today. Thousands of families lost their homes and entire neighborhoods suffered from vacancies, blight and declining values. In addition to its effects on families and neighborhoods, pre-foreclosed real estate hinders economic development, costing the city roughly $84 million in unpaid property tax annually.
To deal with a continuing foreclosure crisis, City Councilman Dan Garodnick is advocating for New York City to buy back distressed mortgages controlled by federal housing authorities, restructure the debt in partnership with not-for-profits, and then resell the notes (and homes) to current homeowners and low- to moderate-income New Yorkers who can support the debt. Banks have been resistant to writing down principal balances because of regulatory constraints, and too many properties have been abandoned, or left in legal limbo. This solution will refurbish vacant or abandoned properties, rejuvenate communities, and give people much-needed housing.