In a groundbreaking sale that opened the tap on a new city loan fund created to preserve affordable housing, a nonprofit developer has purchased the distressed mortgages of four foreclosed residential buildings in Brooklyn, as reported by The Wall Street Journal.
The Brooklyn affordable-housing developer MHANY Inc. distinguished itself as the first nonprofit to buy an over-leveraged mortgage in New York City when it purchased the four deteriorating apartment buildings, located in Bedford-Stuyvestant, Crown Heights and East New York, from New York Community Bank. The nonprofit developer’s acquisition pivoted on a $1.35 million loan from a new program of the
New York City Acquisition Fund.
The program’s aim is to help level the playing field for affordable-housing developers who are interested in buying discounted properties and keeping them affordable -- a class of developer that is often edged out by private firms with bigger pockets and more room for risk.
“Private equity is paying a ton of money for notes that aren’t necessarily taking into account rent restrictions and the level of repair that is needed," said Abby Jo Sigal, a vice president at the affordable-housing organization Enterprise, which is one of the managing members of the fund, as quoted by the Journal. “That may not be what's best for the building and what's best for the community.”