It took over a year, but the nonprofit that won a stake in a Signature Bank loan book that few dared to touch has hurled the first pre-foreclosures against rent-stabilized borrowers on that debt.
And, the nonprofit venture, Community Stabilization Partners, alleges those borrowers are personally liable for what is owed.
A dozen foreclosure complaints have hit the courts in 10 days.
Community Preservation Corporation, one of three parties in the venture, said the suits were not its opening strategy for the $6 billion in loans, which were deemed toxic after a 2019 law devalued some of the deals to next to nothing.
“We have actively worked with borrowers to resolve payment delinquencies and bring the loans back into good standing,” said a spokesperson for CSP.
But a subset of sponsors has been “unresponsive and uncooperative,” a combination that forced CSP to take defaults to the courts.
Two of those groups are among the most notorious alleged profiteers in the rent-regulated space: cutthroat private lender Madison Realty Capital and Ved Parkash, a frequent flyer on the public advocate’s worst landlord list.
Parkash faces four foreclosure actions over $20 million in debt. For Madison, the suit count totals eight, and the defaulted debt is $157 million, court records show.
A spokesperson for Madison did not comment in time for publication. Parkash could not be reached.
It’s no shocker that the so-called slumlord’s head is among the first to roll.
Parkash has an inch-thick playbook for squeezing illegally high rents out of regulated apartments.
He’s been accused of ignoring infestations and violations so tenants would move, allowing him to raise rents or yank units from stabilization entirely. When the 2019 rent law closed those loopholes, Parkash got more creative, allegedly locking out renters so he could lease units short-term for more money than the law allows.
In January, a five-alarm fire tore through one of his Bronx buildings and displaced over 250 tenants. Parkash last year sued the city to exit a program that monitors landlords with chronic heat complaints, the publication the City reported.
The buildings on the line for Parkash are 89-20 161st Street in Queens, 1110 Anderson Avenue in Brooklyn and 2015 Creston Street in the Bronx.
Madison Realty Capital is a more nuanced case.
Once upon a time, the firm was a go-to lender to Raphael Toledano, an owner ultimately barred from New York real estate after Attorney General Letitia James pegged him for harassing rent-stabilized tenants via coercive buyouts and illegal construction.
