In 2009, CHPC released a report that spearheaded the debate around multi-family buildings that were going into foreclosure. It described the problems associated with over mortgaged multifamily rental proper ties in New York City, and the wider implications of over mortgaging across the country. If offered analysis of data on properties secured through CMBS activity between 2004 and 2007, as well as more recent anecdotal examples of impacted residential properties in NYC. And finally, and most importantly, it put forward public policy recommendations at the federal, state, and local level.

Debt Threat: Saving Multifamily Rental Housing From Zombie Mortgages

While we read regularly about single family homeowners across the country who are facing foreclosure, collapses in the financial sector have also significantly impacted commercial proper ties. Across the country, shopping malls, office buildings, and hotels which have failed due to the current recession are hitting communities hard. With commercial real estate (CRE) loans based on wildly overoptimistic expectations of income, many of these properties are now facing default and foreclosure.

Worse, they are becoming an economic drag on their communities. The Shops at Atlas Park, a new shopping mall in a commercially underserved area of Queens, is currently in foreclosure. The South Shore Outlets Mall in Staten Island is delinquent on its loan. Hidden within the financial tangle of commercial real estate mor tgage loans are residential multifamily rental properties carrying debt loads that exceed their ability to pay. Without intervention, many of these buildings may become the problem properties of the future, as well as a negative influence on their surrounding neighborhoods. And while Stuyvesant Town and Riverton Houses have received much publicity, they are only two examples of a much larger problem. And it’s not just in New York City…

You can view the report below:

Download the full report here (pdf)