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‘Stolen’ Brooklyn homes to be returned after judge slams city housing program

Judge Partnow: ‘Unconscionable and shocking to the conscience of the court’

March 29, 2019 By Mary Frost and Rob Abruzzese
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In a victory for a handful of beleaguered homeowners, Brooklyn Supreme Court on Thursday vacated foreclosure judgments against six property owners who lost their valuable real estate through the city’s Third Party Transfer Program.

Justice Mark Partnow reasoned that the city’s “overly broad and improper” use of the housing preservation program resulted in the owners’ losing their property, causing a “grave injustice,” according to the text of the decision.

The scathing decision against the city program may have broad implications across the five boroughs, extending far beyond the six property owners.

Justice Partnow said in his decision that the unjust seizure of property was “not an isolated occurrence, but, rather, is a widespread occurrence being experienced by many other property owners, who are being inequitably stripped of their valuable property rights.”

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The city, however, disputes the judge’s ruling.

“The city’s TPT Program helps protect tenants and the affordability of their homes.  Owners of properties in arrears are treated fairly and afforded due process before the city takes action,” Nick Paolucci, spokesperson for the New York City Law Department, told the Brooklyn Eagle on Friday.

He added, “We disagree with this ruling and are considering our legal options.”

Related: Brooklyn officials demand full-scale investigation of home theft in black & brown neighborhoods

Brooklyn officials and housing experts have been sounding the alarm over the past few years, saying that homes in gentrifying neighborhoods are increasingly being systematically stolen through liens for minor unpaid bills, fraudulent documents, predatory foreclosures and the New York City Department of Housing, Preservation and Development’s TPT program.

The TPT program designates sponsors to purchase and rehabilitate distressed properties. HPD says on its website that it does this “in order to improve and preserve housing affordable to low- to moderate-income households.” Neighborhood Restore, a non-profit organization, administers the program.

Some homeowners, though, say they’ve lost possession of their homes over technicalities as minor as late water-bill payments. In some cases, the owners were never notified by the city that their homes were in foreclosure. In other cases, homes that were called distressed by the city were in fine shape and needed no major repairs.

Bedford-Stuyvesant, Crown Heights and East New York have some of the highest rates of real estate fraud, along with Canarsie and Flatlands, legal advocates said at a March 15 hearing sponsored by Borough President Eric Adams, Assemblymember Tremaine Wright and State Senator Velmanette Montgomery.

Julie Howe, senior staff attorney for the Foreclosure Prevention Project at the New York Legal Assistance Group, said at the hearing that foreclosures in Brooklyn “are at their highest level since 2009, and as a result, homeowners are desperate for assistance.”

In February, a crowd of chanting home owners and their supporters held a rally in front of Brooklyn Supreme Court, demanding that judges return homes confiscated from Brooklyn residents through the TPT program.

BP Adams renews call for moratorium on questionable foreclosures

In November, Adams and Councilmember Robert Cornegy called for a “full-scale forensic audit and investigation” of the city’s TPT program as well as the broader issue of deed fraud.

Adams reiterated that demand on Thursday.

“My call remains for a temporary moratorium on TPT seizures and other foreclosures in Brooklyn,” Adams told the Brooklyn Eagle.

He added, “We need a full-scale forensic audit and investigation on the federal, state, and city levels into the issue of deed fraud in the borough of Brooklyn, including the role that the TPT program may be unintentionally playing in defrauding homeowners of their property.”

State Sen. Montgomery, co-sponsor of the March 15 Borough Hall hearing, told the Eagle, “First and foremost, I am so happy for the owners and shareholders of the six properties that were returned. This court ruling is extremely encouraging and validates the concerns that so many of us have had about the Third Party Transfer (TPT) program.”

Related: Protesters: Homes in gentrifying Brooklyn neighborhoods ‘stolen’ by city’s TPT program

She added, “I am preparing a letter to request an audit of the program and will ask my state colleagues to join me. As a follow-up to our March 15 legislative hearing on the homeowner crisis in Brooklyn, my colleagues and I will be issuing a report with policy and legislative recommendations to address TPT, municipal liens, deed and equity theft and predatory foreclosure practices.”

‘A grave injustice to defendant owners’

Justice Partnow ruled in his decision that although the six properties each had a unique set of circumstances, he was vacating the judgement against each one. Partnow explained that the TPT program was, “intended to be a beneficial program,” but its “overly broad and improper” use had unfairly taken property from its owners.

“To permit such transfers, in light of the facts, would work a grave injustice to the defendant owners for no reason and result in an unjustified windfall to the city,” Partnow wrote.

“The court also determined that the judgment was unconscionable and shocking to the conscience of the court based on the amount of the lien versus the value of some of the properties,” he went on to say. “Lastly, in some instances, the city’s misleading nonfeasance would result in a manifest injustice.”

Related: Brooklyn facing crisis in housing theft and foreclosures, advocates say
Related: Prison time for Brooklyn man who stole elderly neighbor’s home

In the 69-page decision written by Justice Partnow, he explained his reasoning for each individual property. In each instance, he wrote, “By foreclosing in rem and transferring title to Neighborhood Restore pursuant to the TPT program…the owners are completely stripped of all of their equity in their properties.”

In the case of one of the properties, 23 MacDonough St., Justice Partnow wrote that the city conceded that the property was not distressed, according to the administrative code, and that there were no repair charges more than $1,000.

Justice Partnow ruled that the foreclosures and the transfer of the property to Neighborhood Restore are vacated, and restored the property titles to their original owners.

The judge went on to shoot down statute of limitation claims by HPD and stated, “Due regard for property ownership is a fundamental tenet of the U.S. Constitution and the NY Constitution. Since the right to property is a fundamental right in New York, all subsequent grants of power…are limited as to how they adversely affect it.”

Story updated on April 1, 2019 with a statement by Nick Paolucci, spokesperson for the New York City Law Department.

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