Congressional power grab for multihousing
In May, President Obama signed into law The Mortgage Reform and Anti- Predatory Lending Act of 2009 (H.R. 1728). While the measure focuses largely on single-family lending practices, two amendments were added and later withdrawn because of technicalities, that would adversely affect apartment owners: a forced foreclosure mechanism and an overly broad renter notification requirement.
Rep. Nydia Velazquez (D-NY) attached an amendment that would allow the federal government to prematurely force apartment properties into bankruptcy and then sell them at a lower price to an entity that agrees to convert them to affordable housing. Sen. Charles Schumer (D-NY) sponsored a comparable amendment, but withdrew it on procedural grounds.
Velazquez's amendment directs HUD and the Treasury Department to work together to create a loan modification program for "at risk" multifamily properties. The bill does not target any specific level of mortgage distress, property condition or occupancy level that would justify government intervention. Instead, it says federal action would be allowed when an apartment is at risk of disinvestment or default or is in foreclosure already.
Properties could be subject to government intervention, including but not limited to:
