The U.S. Treasury should develop a plan to protect renters in apartment buildings owned by developers that are in danger of defaulting on loans, Senator Charles Schumer said on Tuesday.
Some "predatory developers took out mortgages they could never realistically afford in the first place and unless the federal government finds a way to restructure those loans, it's going to be the tenants and not the developers who are left in buildings that end up falling apart around them," the Democrat said in a statement.
New York and at least 16 other states -- Tennessee, Georgia, Florida, Michigan, Nevada, Texas, Illinois, Ohio, Indiana, Connecticut, Oklahoma, Kentucky, Missouri, Mississippi, California and Massachusetts -- have apartment complexes that are at risk of foreclosure, Schumer said, citing data from Deutsche Bank and housing advocates.
In New York City, there are 60,000 to 90,000 apartments at risk of foreclosure, Schumer said.
A March court case heightened the financial risks for one of Manhattan's biggest apartment complexes, Stuyvesant Town and Peter Cooper Village, after an intermediate appeals court ruled rents could be deregulated because the complexes received city tax breaks.
In January, Fitch Ratings in a statement said Tishman Speyer Properties, LP and Blackrock Realty, which borrowed about $4.5 billion to buy the vast complex, had only around six months of reserves left to cover some of the debt on the property.
Spokesmen for Tishman and Blackrock had no immediate comment. (Reporting by Joan Gralla in New York; Editing by Padraic Cassidy)
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