Last month, the FDIC announced that it completed its final sale of Signature Bank’s multifamily housing loans, over nine months after the Bank’s collapse. This news is important to all New Yorkers who care about affordable housing.
Signature Bank financed about 80,000 housing units in 3,000 buildings throughout NYC. It partnered with some of the worst landlords known to tenant advocates for their predatory and neglectful practices. Because of this advocacy, the way the FDIC managed the sale of the loans has the potential to make a difference.
Consider Jacob Tannenbaum’s story. Jacob and I share the same landlord: Watermark Capital Group, an owner of Brooklyn multifamily properties (along with their property management arm, Full Time Management). Watermark received financing from Signature Bank, yet the Bank would fail to hold them accountable.
In autumn 2020, Jacob was thrilled to secure a rent-stabilized apartment in Bushwick. After he moved in, it rained, and the basement of his first-floor unit flooded. Over the next 18 months, his space flooded ten more times. Jacob also reported leaks, rats, mold, heat/cold issues, and security problems. The property manager either ignored Jacob’s complaints or delivered insufficient repairs with a false promise of a longer-term fix. It seemed that the landlord was neglecting maintenance and causing uninhabitable conditions in order to displace Jacob, destabilize the apartment, and convert it to market rate.
Jacob’s story is familiar in many Signature-financed buildings. Tenants and advocates had for years documented that Signature Bank lent to known bad actors based on questionable underwriting, essentially contributing to tenant displacement.
Combatting this pattern is part of a larger effort to require banks lend responsibly in properties that house mixed income and working-class communities. Banks, by enforcing loan terms, can help ensure that landlord borrowers will provide tenants with safe, stable, and affordable homes. Signature Bank did not act on these values.
Usually, when a bank fails, regulators quickly sell existing loans to the highest bidder. The FDIC, however, proceeded differently with Signature’s collapse, thus fulfilling its statutory requirement to prioritize building preservation and tenant safety.
FDIC regulators analyzed data and convened meetings with tenant associations in Signature-financed buildings to ascertain conditions. Then, they devised a program whereby the buyer of the loans would partner with the FDIC to intervene in the types of adverse conditions that have harmed tenants. Finally, the FDIC sold the mortgages of the most distressed and problematic buildings to a bidder with the mission and expertise needed to actually implement this program.
Over the last few months, I and other tenants have come to understand the Signature sale as a moment in which we can amplify our voices and gain long-sought improvements. The uniquely structured sale of these loans is one step in a broad effort.
Tenants earned our seats at the table. Now, our future collaboration with the FDIC and lenders might lead to systemic improvements. Tenants would like to know from our new partners how they will intervene in cases of building distress, and how those interventions will be assessed. Our partners might apprise us of new policies to escalate with landlord borrowers who do not adequately improve conditions in their buildings, using the leverage they have as lenders to implement changes that are transformative and long-lasting.
In addition, tenants deserve the support of City and State leaders. We have met with NY State Senators, NY State Assembly Members, and others regarding Signature Bank and our landlords. We plan to speak with community members in Sunset Park about an 800,000-square-foot development financed by Signature and initiated by Watermark. We invite Governor Hochul and Mayor Adams to work with us, the FDIC, and lenders. Their leadership can direct agencies to protect tenants, ease the housing crisis, and support responsible development. Together, we can pilot action steps in the former Signature portfolio that might be codified in the future.
We’ve thought about pilot projects in the former Signature portfolio and welcome more ideas. Funding for preservation programs can help finance the acquisition of properties by responsible owners. For tenant organizing, advocacy, and more pathways to ownership, support is needed. The creation of an interagency task force could close loopholes and coordinate for inspections, repairs, and records review. Tenants in former Signature properties also need general support for our role in partnership with the FDIC and lenders.
We would also love to see more professionals from the building industry get involved in housing advocacy, particularly architects, engineers, urban planners, and construction industry experts. I invite all tenants to get involved. It starts with talking to your neighbors; a new year is the perfect time.
Elisa Holland is a designer, planner, and advocate in architecture and the built environment. She is a liaison to the Equitable Reinvestment Committee, a coalition that encourages lenders to adhere to responsible multifamily lending.
