The Serrano Report, Vol. VIII, #9
On Capitol Hill
Serrano Discusses FBI Priorities with Director Mueller
On Wednesday, in a hearing held on the fiscal year 2012 budget for the Federal Bureau of Investigation (FBI), Congressman Serrano questioned FBI Director Robert Mueller on the FBI’s priorities in the wake of September 11th, and the FBI’s contingencies in the case of a government shutdown.
Serrano began his remarks by thanking Mueller for his 10 years of outstanding service to the country, and for his openness and willingness to listen to Members of Congress. In particular, Serrano thanked Mueller for releasing thousands of documents relating to the FBI’s activities in opposition to the independence movement in Puerto Rico.
Serrano had been concerned that in the wake of September 11th, the FBI’s expanding efforts in anti-terrorism related activities had left it short-handed in some of its more traditional missions. Mueller stated that after September 11th the FBI moved approximately 2000 agents from investigating white collar crimes and combating violent criminal organizations to anti-terrorism related efforts. Mueller also said that despite subsequent budget increases, these agents had essentially not been replaced, leaving the FBI with fewer agents working on the FBI’s traditional missions. Unfortunately, this meant that some crimes may not have been sufficiently investigated as a result. Mueller concluded by saying that he thought that the present FBI setup was sufficient to accomplish the FBI's current missions.
Serrano also questioned Mueller about the impact of a government shutdown on the FBI. With a potential shutdown looming, Mueller said that a shutdown would be very difficult for the FBI. He said the FBI would concentrate on critical missions, but that morale at the agency would certainly be negatively affected.
“The impact of a government shutdown cannot be understated,” said Serrano. “I think every member, of both parties, should pay serious attention to what one of our nation’s premier law enforcement officials is saying about the negative impact of a shutdown.”
Serrano Meets with Bronx Soccer Coaches
On Thursday April 7th, Congressman Serrano met with Andrew So and Carlos Bhanji of South Bronx United Soccer Club to discuss their soccer program as well as their education and leadership development programs. So and Bhanji were in Washington, DC with the U.S. Soccer Foundation for their annual Advocacy Day.
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So (left) and Bhanji with Serrano |
In the Bronx
Serrano Applauds Recipients of EPA Award
This week Congressman Serrano congratulated The Bronx River Alliance and Down East Seafood Inc. for receiving Environmental Quality Awards from the U.S. Environmental Protection Agency (EPA). Each year the EPA recognizes individuals and organizations who contribute significantly to improving the environment in their city or state. The Bronx River Alliance is a non-profit that works to develop and restore the area along the Bronx River to allow for expanded ecological, educational and recreational use by local residents. Down East Seafood Inc., based in Hunts Point, recently became the first small business in New York City to operate an all-electric, emissions-free medium-duty delivery truck, which the company purchased as a way to help combat harmful fuel emissions in the South Bronx. Serrano nominated both organizations for the awards earlier in the year.
“I am very proud that The Bronx River Alliance and Down East Seafood will receive national recognition for the tremendous work they perform here at home,” Serrano said. “This district possesses some of the leading minds in the country when it comes to environmental justice and restoration, and in the case of Down East Seafood, we also have one of the most forward-thinking small businesses in the entire city. Both awards are fully deserved and will add to the reputation the South Bronx has earned of being at the forefront of environmental activism and innovation.
“I am honored that Congressman Serrano nominated us for such an award,” said Ed Taylor, owner of Down East Seafood Inc. “We are ecstatic to receive this type of recognition from both the Congressman and the EPA.”
“This is very welcome news,” said Linda Cox, Executive Director of The Bronx River Alliance. “With our partners, we strive to improve the environment of the Bronx and of New York City and we are very appreciative that our efforts are recognized here by Congressman Serrano, who has been such a leader in the environmental movement of the Bronx.”
Serrano Celebrates Expansion for Health Center
On Thursday, Congressman Serrano congratulated Urban Health Plan on its opening of a new clinical space in the Bronx that will allow 1,000 additional patients to receive care each year. Urban Health Plan (UHP) is a federally qualified community health center that was founded in 1974 in the Bronx. It serves the Mott Haven, Hunts Point, and Morrisania communities, and last year provided care for nearly 43,000 Bronx residents through almost 223,000 patient visits. The new center, located on the 4th floor of UHP’s main facility on Southern Boulevard, was supported by Serrano and funded, in part, by the American Recovery and Reinvestment Act.
“Urban Health Plan is an exceptional community health center,” Serrano said. “By employing highly skilled medical professionals, Urban Health Plan not only pioneers new methods of care but also helps to drive our local economy. This ribbon cutting enlarges Urban Health Plan’s footprint in our community, and I commend the many women and men who helped make the new center possible.”
Serrano Writes to FDIC about Mortgage Practices at Banks
This week Congressman Serrano sent a letter to the FDIC Chairman Sheila Bair, asking her to examine how banks value and sell mortgages held on distressed multifamily buildings, and the impact this has on the health and safety of building residents. The full text of the letter is below:
April 7, 2011
The Honorable Sheila Bair
Chairman
Federal Deposit Insurance Corporation
550 17th Street NW
MB 6028
Washington, D.C. 20429-0002
Dear Chairman Bair:
I am writing to register my concern about an ongoing banking issue which is having a severe impact on the health and safety of a great number of families in my Congressional District and across New York City, and which impacts the accuracy of how banking institutions in New York City and elsewhere report the value of their assets. Specifically, I am concerned about how banks are valuing the mortgages they hold for severely distressed multifamily buildings, and whether those valuations honestly reflect the physical condition of the properties.
As you are probably aware, the credit boom and subsequent housing crisis that dominated the early part of the last decade has played out somewhat differently in New York City—where approximately 64 percent of the population rent homes in multi-family apartment buildings—than it has in the rest of the nation. Between 2003 and 2008, hundreds of apartment buildings were purchased at substantially inflated prices by real-estate investors and private equity firms across New York City. These transactions were fueled by a number of banks and investment firms who provided as much as 80 percent of the capital for each of these deals in the form of short-term mortgages. According to New York City’s Department of Housing Preservation and Development (HPD), there are now more than 110,000 occupied apartments in multifamily buildings that may be overleveraged and at serious risk of disinvestment and/or foreclosure. Often these properties carry hundreds, if not thousands, of violations of New York City’s Housing Maintenance Code, including many that are considered hazardous.
To date, no area of New York City has experienced the negative consequences of this trend more than the Bronx. In 2008, my office worked with HPD, Senator Charles Schumer, Fannie Mae and their regulator, the Federal Housing Finance Agency (FHFA), to bring relief to residents living in a portfolio of 14 buildings which were facing foreclosure and had descended into nearly uninhabitable physical condition. In that case, known as the Ocelot portfolio, Fannie Mae and its regulator recognized that the poor physical condition of the portfolio had reduced the value of the loan. Additionally, the agencies recognized the substantial cost associated with restoring the portfolio back to decent, safe and sanitary conditions and accepted, in part, a revaluation of the loan to reflect its true value. The revaluation allowed for a sale to a responsible landlord who was able to provide the building with the repairs it desperately needed.
Presently, there are hundreds of distressed properties across the city whose mortgages are held by banks. If a property is facing foreclosure, in many cases, the bank simply seeks to sell the loans as quickly as possible, with seemingly little regard for the buyer’s intention for the properties. The vital issue is how these loans are valued by banks at the point of sale.
In my view, the value of a distressed property must reflect the cost associated with making that property livable and nonhazardous again. As these loans are based on using multifamily buildings as collateral, to the extent that such collateral deteriorates, the value of the loan should also decline. Unfortunately, the practice we see from banks does not account for the impaired physical condition at the point of sale. Instead, severely distressed properties are being sold at prices far in excess of their true value. Not only can this demonstrably put the life, health and safety of tenants at risk—who face the prospect of further disinvestment—it also puts enormous financial strain on municipal government, which is often left having to bear the cost of major capital and rehabilitation work.
I believe the FDIC has an important role to play in addressing this issue. As part of the FDIC’s authority to preserve the safety and soundness of the institutions it oversees, I believe the FDIC should investigate how banks are valuing multifamily mortgages and properties in their financial reporting and statements, specifically with a focus on how impaired physical condition affects the value of these loans. To the extent the FDIC has not already done so, I would ask that the FDIC develop safeguards to ensure that real estate asset values, especially in the multifamily market, are more closely scrutinized for possible changes in valuation based on deferred maintenance and/or substantial outstanding capital needs.
According to research on New York City’s housing and real estate market, New York Community Bank (NYCB), a state bank under the FDIC’s regulatory authority, holds the mortgages of more physically and/or financially distressed properties than any other lender in New York City. Currently, NYCB has 34 properties in foreclosure across the city, which have a combined total of just under 5,000 code violations. Of that number, 16 of these buildings are located in the Bronx and have a combined 2,635 outstanding code violations. Because of NYCB’s central role in many of the issues described above, I would ask that the FDIC begin its investigation into these loan valuation issues by making inquiries with NYCB. My hope is that the FDIC can work with banks under its regulatory authority to develop standards that would help determine a more accurate value for banks’ multifamily real estate assets, and prevent further harm from coming to residents of my community and others.
Thank you for your kind consideration and I look forward to your reply.
Sincerely,
José E. Serrano
Member of Congress
Grant Opportunities
Food Assistance Grant
Application Deadline: June 6, 2011
The U.S. Department of Agriculture (USDA) recently announced the availability of funding to develop and implement a simpler application and eligibility determination system for the Supplemental Nutrition Assistance Program (SNAP). SNAP provides food assistance for low income families. To qualify, individuals and families must complete an application process. The USDA is now seeking proposals for processes and methods that would improve access and make the SNAP process easier for the applicant/recipient. State and local governments, 501(c)(3) not-for-profit organizations, food banks, or other emergency feeding organizations are encouraged to apply.
For more information about this opportunity, please visit the USDA's website (PDF).
For information on other government grants, please go to: www.grants.gov.