How Gentrification Happens
May 12, 2015 11:29 AM   Subscribe

 
This article is another example of when a person says "I'm not racist" there is a good chance the next thing out of their mouth will be some racist bullshit.
posted by el io at 11:39 AM on May 12, 2015 [18 favorites]


Holy . . . Wow. Talk about a shanda.

I'd like to believe this comment, from the section:

I mean, come on. If the story this guy is selling is true, it's been incredibly lucrative for him. So he's gonna describe his whole scam in detail to a reporter for New York Magazine??? Do you really think a guy who is this much of a shark when it comes to business would be this naive?

Either this guy is a nobody who's telling tall tales like that high school kid who said he made millions of dollars in the stock market, or he really is a businessman who stands to profit handsomely from whatever the blowback to this story is.

You heard it here first: in a few more days we're going to learn that this story is bogus.


I'd like to believe that, because it would reduce the amount of cartoonish evil in the world. But . . .
posted by Countess Elena at 11:58 AM on May 12, 2015 [3 favorites]


So I'm curious -- is the dude a face/front-man for an organization ? A hell of a entrepreneur ? At 27, rolling that many projects, sure, but then it notes how many he used to have and sold out ?
posted by k5.user at 11:58 AM on May 12, 2015


Oh yeah, this is 100% illegal, if accurate. I'm morbidly curious as to why the new tenants are so adamant that they not share a building with a single black person. Possibly even most confirmed racists would be able to tolerate that. And they're tenants – they rent – so it's not like they're 'protecting their investment'.

Either this guy is a nobody who's telling tall tales like that high school kid who said he made millions of dollars in the stock market, or he really is a businessman who stands to profit handsomely from whatever the blowback to this story is.

I'd lay odds that the blowback amounts to a Steve Sailer blog post and some barely measurable increment of bad blood in a community that is, remember, disappearing.
posted by topynate at 12:10 PM on May 12, 2015 [1 favorite]


One thing jumped out at me:

He laughs. He breaks for a few more phone calls — many are carried out in Hebrew, though the profession-specific words seem to be stuck in English: brownstone, skim coating, Prospect Park. I ask him what the first thing is that he considers when deciding whether or not to buy any given building.


Erm. No. Probably Yiddish, not Hebrew, if he's working with Hasidic folks. Most likely this is the reporter being somewhat clueless, rather than him making stuff up, but still.
posted by damayanti at 12:15 PM on May 12, 2015 [12 favorites]


The incredulity around this article is unreal.

Let me make this simpler for some people:

Q: Can white liberal New Yorkers be racist?

A: Yes.
posted by Avenger at 12:21 PM on May 12, 2015 [13 favorites]


He's telling the gods honest. People like to talk, explain, boast. It isn't rocket science. Some developers will move "gang members" into apartments or degrade services make a lot of construction noise etc. to chase out tennants if there is rent control or laws that get in their way. Life is easier the less scruples you have. To be honest he is easier to take than the drivel about walkable neighborhoods and bike lanes that attends development in Portland, that and the easy conflation of resettlement with revival and positivity.
posted by Pembquist at 12:21 PM on May 12, 2015 [1 favorite]


I mean, come on. If the story this guy is selling is true, it's been incredibly lucrative for him. So he's gonna describe his whole scam in detail to a reporter for New York Magazine??? Do you really think a guy who is this much of a shark when it comes to business would be this naive?

And what would the consequences be for him if he did? The banks, courts, and city are all suddenly going to start to care? Here's "Ephraim":

It’s not 100 percent — I mean, it’s legal, but sometimes in the mortgage there’s a clause that says if you sell the deed, you have to notify the bank and if you don’t notify them the bank can take the property. But even if you didn’t notify them, the bank has to go through the whole process of getting the property and that takes some time.

And the banks don’t care. They actually like when people take care of the building. Because it will actually cost them $100,000 a year — people breaking in, pipes busted. As long as everything is good, everything running, they just leave it alone until they’re taking it.


Sounds to me like it's the guy criticizing him in the comments that is naive.
posted by ryanshepard at 12:25 PM on May 12, 2015


I don't even know why someone would be surprised by this story. I'm sure it gets far worse than this. Although I don't believe his talk about white people complaining because one black guy moves in - I'm sure that happens sometimes, but I suspect he's stretching a bit to justify his practices.
posted by Edgewise at 12:28 PM on May 12, 2015


I'm unfortunately way less surprised by the blatant racism than I am by the fact that he can buy deeds to a bunch of properties that are in default, have no plans whatsoever to pay the mortgage, and is just running this interim scam of collecting rent. That's a jawdropping way to use the city as a cash register in bad faith and I'm morbidly impressed (which carries a healthy dose of being apalled).

I mean, holy SHIT. What a scam.
posted by entropone at 12:32 PM on May 12, 2015 [7 favorites]


I mean, holy SHIT. What a scam.

Certainly squatting is more ethical than this shit.
posted by el io at 12:36 PM on May 12, 2015 [8 favorites]


It's hard to believe it actually works.
posted by fraxil at 12:40 PM on May 12, 2015


One time my band played a party in Crown Heights for what turned out to be a bunch of coked-up Hassid real estate brokers. All of them in their mid-20s, and were totally bragging about exactly this kind of thing. So yeah, this sounds credible to me.
Later on, my guitarist and I (who are both secular jews) agreed that if we'd grown up in buildings owned and managed by guys like these, we'd be anti-semites, too.
posted by Jon_Evil at 12:41 PM on May 12, 2015 [9 favorites]


Honestly compared to some of the things I've heard/seen landlords doing, this is merely illegal and grim (and racist!) rather then straight up criminal or violent.
posted by The Whelk at 12:46 PM on May 12, 2015 [1 favorite]


If there’s a black tenant in the house—in every building we have, I put in white tenants. They want to know if black people are going to be living there. So sometimes we have ten apartments and everything is white, and then all of the sudden one tenant comes in with one black roommate, and they don’t like it. They see black people and get all riled up, they call me: “We’re not paying that much money to have black people live in the building.” If it’s white tenants only, it’s clean. I know it’s a little bit racist but it’s not. They’re the ones that are paying and I have to give them what they want. Or I’m not going to get the tenants and the money is not going to be what it is.

I feel like the comments here are going to skew towards castigating the interviewee for being racist - while I think that's valid, there's so much systematic racism supporting this statement that I want to highlight it lest it gets overlooked.

Can we talk about how the historical deliberate association of race with class through denial of jobs, housing and education, abuse of the criminal justice system, and denigration of cultural traits associated with black people as "lower class" provides the basis to justify racism as pure capitalistic decisions? How screwed up it is that we can strip people of their humanity and rights so long as it's justified by profit? And similarly, how the entire conflation of race with class pushed by white people without giving credence to how these class disparities stem from social and political decisions made through racial animus facilitate this? The next time a white guy pipes up to say "racism doesn't exist - it's all class", consider who benefits from having this means to justify racism.

Can we talk about how the words of white people, between white people, carry so much weight? These conversations are occurring not only in housing decisions, but in board rooms, in schools, in police headquarters, in court houses. That a racist statement, whispered between white people, is enough to deny people of color of employment, of education, of housing, of their lives. It doesn't even need to be explicit. "I wasn't comfortable with how aggressive he was." "I don't think she'll fit into our team." "I'm worried about the underlying cultural issues." Every white person in the room nods - they know what it means. This is why reverse racism doesn't exist - the words of people of color against white people never carry as much power. This is why we must call out racism.

Can we talk about how the above two systems are deliberately used as tools to drive wedges between non-black people of color/cultural minorities and indeed, even between more privileged black people and less? You make economic stability contingent on being racist; you make social status and "fitting in" contingent on being racist. So is it surprising that the people who are least assured of their economic and social position are coerced into becoming complicit with your system? Bending to the rules that white people have set, and then used as model minority examples of how the rules work if only all minorities would be willing to be as subservient to white people and willing to build their second-class citizen statuses on the backs of their third-class citizen kin?

White people too frequently use stories and statements like these to act as a foil for themselves. Highlighting how they'd never be racist. How they'd never act like that, or say things like that. But that's the exact opposite way to go with these things: understand how the structure explicitly allows for these types of racism, and be uncomfortable in your complicity in it.
posted by Conspire at 12:51 PM on May 12, 2015 [55 favorites]


I did appreciate the one note of wabi-sabi at the end of the story:

[...]in the Jewish religion there’s a weird thing where you don’t cut down a fruit tree... A building is not really a selling thing. Buildings are for keeping.

'Ephraim' doesn't strike me as someone who appreciates the principle of bal tashchit. But I wonder, did he realise that his buildings are to him as fruit trees were to the ancient Hebrews?
posted by topynate at 12:55 PM on May 12, 2015 [12 favorites]


White people too frequently use stories and statements like these to act as a foil for themselves. Highlighting how they'd never be racist. How they'd never act like that, or say things like that. But that's the exact opposite way to go with these things: understand how the structure explicitly allows for these types of racism, and be uncomfortable in your complicity in it.

Yeah, I'm down with your post.

I think there's something pretty interesting going on with this article, though. It's this one person's individual racism, that is leveraged into systemic racism - and sold to people through housing in ways that make them complicit with that plausible deniability that comes with ignorance, distance, or just passing the buck.

To me, this article and interview didn't separate out these different forms of participation in racism - it tied them all together with this guy as a focal point and lynchpin of the system.
posted by entropone at 1:11 PM on May 12, 2015


I think this is probably a display of pretty normal attitudes.

When I lived in Crown Heights in 2007, my building's shady "management company" (avoiding phone calls, "Nobody of that name works for us. Who did you speak to?", botched agreements, constant failure to communicate, theft of deposit through evasion) once sent a representative to speak to "tenants." He asked me, a white person, how we (our white household) liked the building and whether we thought it was priced correctly. He also told me that they were trying to get "the right people" into the (mostly West Indian) building. He said this in front of the West Indian superintendent with whom I shared a disgusted exchange after the management guy left.
posted by eyesontheroad at 1:11 PM on May 12, 2015 [2 favorites]


Life is easier the less scruples you have.

Oh my, yes. I am sure that the reason I am not rich and never will be is:

a.) I have never been in the right place at the right time.

b.) I have, like, one or two scruples lying around that I can't seem to get rid of.
posted by Steely-eyed Missile Man at 1:22 PM on May 12, 2015


Life is easier the less scruples you have.

My next door neighbor had a miniature poodle named Scruples. I don't think life got any easier for him when she died.
posted by grumpybear69 at 1:29 PM on May 12, 2015 [8 favorites]


But man do I sleep easier now that the damn yippy thing is dead.
posted by Slackermagee at 1:40 PM on May 12, 2015 [4 favorites]


My next door neighbor had a miniature poodle named Scruples. I don't think life got any easier for him when she died.

Unfortunately he didn't know the coral air E: Happiness is not giving a shit about anything, or anyone.
posted by Pembquist at 1:41 PM on May 12, 2015


Erm. No. Probably Yiddish, not Hebrew, if he's working with Hasidic folks.

Yeah, surely this. Most jews I know likely couldn't identify spoken conversational hebrew if their lives depended on it, much less anyone else.
posted by poffin boffin at 1:42 PM on May 12, 2015


anyway i want to go door-to-door in east new york and hand out copies of this article because fuck that guy.
posted by poffin boffin at 1:43 PM on May 12, 2015 [11 favorites]


Q: Can white liberal New Yorkers be racist?

I uh would generally not describe a Chasidic man as a white liberal New Yorker. Or at least in any way an embodiment of the stereotype of one.
posted by griphus at 1:46 PM on May 12, 2015 [21 favorites]


I think he thinks fruit trees are literal fruit trees, and not his buildings.

I live on a rapidly gentrifying block for like the billionth time in NYC. This time though I have a rent stabilized lease, and will never leave my apartment. The turnover started since we moved in 2 and a half years ago. The change is always shockingly quick. Now whenever we call to complain about the water pouring in from a leak in the ceiling, instead of offering to fix it, they offer me a buyout. It's really depressing when you think about what $20,000 will actually get you in New York real estate terms. I now have a place to live for the rest of my life - for a good rate. I can't sell it, but I can live there forever. If I leave the rent in my building is now 3 times what it was when i moved in 2.5 years ago. Due to changes in the rent stabilization laws, there are very few new rent stabilized apartments. Those that are vacated are creatively turned into market rate apartments. There are property management companies that specialize in turning over rent-stabilized apartments. (Here is an article not about Hasidic landlords where the landlords essentially say the same thing. This is a self-link -in that the person who wrote the article is related to me.)
posted by goneill at 2:03 PM on May 12, 2015 [1 favorite]


Q: Can white liberal New Yorkers be racist?

I uh would generally not describe a Chasidic man as a white liberal New Yorker. Or at least in any way an embodiment of the stereotype of one.

I think this is in reference to the "racist tenants" that the landlord claimed would complain if one black person moved into their building.
posted by eyesontheroad at 2:06 PM on May 12, 2015 [5 favorites]


Oh, then, yeah, I can see the argument. But on that point there was this upthread:

Although I don't believe his talk about white people complaining because one black guy moves in - I'm sure that happens sometimes, but I suspect he's stretching a bit to justify his practices.

If an existing apartment building in New York City has no black tenants, that's not in any way, shape or form an accident of fate. And I've lived in buildings like that, and neighborhoods like that and I know for a fact that "few or no black people" is a reason people move to certain neighborhoods and "few or no black people" is a reason that people move to certain buildings. And people will absolutely raise a stink about it, if quietly (especially in these times when it's less and less accepted to be openly racist.)
posted by griphus at 2:20 PM on May 12, 2015 [6 favorites]


My sister, her husband and my mother are house flippers and slum lords, and while what they do is different - not many are attempts are gentrification - much of the music is the same. Including the shady maybe sort of mostly but not totally legal shenanigans of acquiring properties.

Most of their victims are black. My mother, who used to be terrified of sounding racist now tells me how "they" live in squalor and "they" cause trouble. Weirdly, she still believes in bigger efforts at social justice and is solidly democrat, but doesn't see how her actions contribute to the systemic problems for POC. Some of it is intentional blindness, but some of it really is just not seeing the forest for the trees.

My sister and her husband are the most problematic. He is a con man through and through. He used to fix up and sell cars, flipping the odometer back and other dishonest dealings. And now he's moved on to real estate. He glorifies his actions, telling stories deals he makes, the people he scams. He even talks about evicting people at gun point as if it's some source of pride.

My sister is the perfect wife in these matters; sweet, somewhat innocent and charming, and the two work as a team to work over both the down-trodden and the prospective buyer. They have 3 young children often in tow - who wouldn't think they were good and wholesome? I don't know how much she is aware of the dishonest part of her dealings, and how much is an act. She seems to just be going along for the ride; but I recall when we were younger, her actively trying to scam my folks with other boyfriends in ways that she had to be complicit even though she always acted like she had no idea.

Perhaps worst part about it is that they think they are doing the Lord's work by "helping" people who would otherwise foreclose on their homes. (But it never seems to come up when it comes to tenants who are late on their payments). I don't know how much they believe it and how much is an act. I think it's a lot of both.

I don't really talk to them anymore. Briefly, I thought that I could use their help in getting out of my home and into a new home when my husband and I couldn't qualify for a traditional loan (unemployment, health issues, debt; all the reasons we shouldn't have been able to qualify. The system was working as designed.) I thought, going in and knowing that they were opportunistic scam artists meant that we would be able to both get their help but be wary enough to protect ourselves from being screwed over.

After a couple conversations, I realized how intoxicating their schtick was, that we were made to believe with the right efforts, we could have a better home, working around the system. Anything was possible. And that's when I realized I was falling down the same trap so many of their victims do, and ultimately I did not know enough to not fall into the con, thus ending our attempts to seek their help. But wow, I had a strong idea of how their scam worked, and I still almost succumbed. If you are poor, or in dire straits, it's easy to buy into the promises they're selling.

I don't know what to do about this. I think they are doing bad things, but I am feel powerless to do anything about it because it is (mostly) legal. It's just 100 ways of shady and harmful. That, and to have any real affect, I'd need to get closer to learn more about their business and I really, truly do not want to be around them.
posted by [insert clever name here] at 2:53 PM on May 12, 2015 [19 favorites]


From goneill's link: "He decried the housing court system as 'skewed toward tenants' and said that property owners struggle, too, what with the rising costs of repairs, utilities, and taxes."

You could have taken that right out of the mouth of my brother-in-law I mention above.
posted by [insert clever name here] at 2:58 PM on May 12, 2015 [1 favorite]


Unfortunately he didn't know the coral air E:

Is this a joke or an astounding eggcorn?
posted by kenko at 3:09 PM on May 12, 2015 [4 favorites]


Third possibility: autocorrect. My iPhone has been suggesting some truly dumb shit for me, lately.
posted by Steely-eyed Missile Man at 3:24 PM on May 12, 2015 [4 favorites]


anyway i want to go door-to-door in east new york and hand out copies of this article

and plant fruit trees
posted by exogenous at 3:33 PM on May 12, 2015 [13 favorites]


Saw @BevisSimpson tweet about this just now:
if i were a Hasidic landlord Id probably talk about how i hate black ppl, scam poor ppl, and other good stereotypes
Hasidic jew landlord: lots of ppl have a negative image of Jewish landlords. however, in reality i hate black people and am rich from usury
posted by Rustic Etruscan at 4:05 PM on May 12, 2015


The coral lies beneath the ocean, the air above the sea, the last letter stands for example, and its a capital e.
posted by Pembquist at 5:34 PM on May 12, 2015 [4 favorites]


Most jews I know likely couldn't identify spoken conversational hebrew if their lives depended on it, much less anyone else.

I think most Jews, even secular ones, can easily tell the difference between Yiddish, a Germanic language, which sounds a lot like German or Dutch, and conversational Hebrew, which sounds a good deal like the Hebrew we hear whenever we go into a synagogue.

Any reporter who claims that a Hasid is speaking Hebrew, rather than Yiddish, hasn't done much research on Hasids. They study Torah in Hebrew, but speak Yiddish for any secular purposes, including family and business. If someone is speaking Hebrew, your odds are good they're Israeli.

Fun fact: in the early days of Zionism, there was a lot of discussion whether everyone should learn English, Yiddish, or Hebrew. The advantage of Yiddish was that most European Jews (which the early Zionists mostly were) already knew it. Hebrew was chosen as a universal language which all the Jews would have some experience with.

Less fun fact: young Hasids seeking to escape the Hasidic community often have problems because their English is not very good, since they've been raised in Yiddish, and they haven't learned how to write well in English.
posted by musofire at 7:44 PM on May 12, 2015 [4 favorites]


sure, and that's why i said most jews i know wouldn't be able to tell if something was hebrew or not, not that they can't tell the difference between yiddish or hebrew.
posted by poffin boffin at 8:55 PM on May 12, 2015


As stunning as this article may seem, both the preying on properties in foreclosure and racist housing practices happen all over America.

The foreclosure crisis set the stage for predatory people to find "loopholes" all over the nation.

And this lanslord's racist rental plans mirror housing prices in 95% of America: if there are no black people on the block/in the area generally, housing prices are higher. It's an old structural racism problem that white people knowingly and unknowingly continue to perpetuate. As soon as there is a new "expensive" place, the existing black families are pushed out by landlords, property tax increases, or cultural rift with the new richer, whiter neighbors.
Everything in this article is happening in your town, you just don't know how to see it.
posted by littlewater at 9:44 PM on May 12, 2015 [1 favorite]


Almost every Jew I know can tell the difference. I wonder if it has to do with how much you are exposed to, or generational difference. They sound nothing alike, though. Yiddish sounds like German and Hebrew sounds like Arabic.
posted by maxsparber at 9:56 PM on May 12, 2015 [2 favorites]


This is probably a naive question, but if its that easy to buy a building and avoid eviction for a few years, why don't tenants get together and do it?
posted by Joe in Australia at 12:21 AM on May 13, 2015 [1 favorite]


It's also entirely possible that the guy's got an Israeli background and actually is speaking Hebrew.
posted by Jon_Evil at 6:53 AM on May 13, 2015 [1 favorite]


It's not likely. The speech the reporter is transcribing, the grammar mistakes, are hallmarks of Yiddish-first Chassidim. Israelis' English, when broken to a similar degree, sounds entirely different. Also, the Israelis involved in this racket are usually entirely secular, and this guy sounds nominally religious.
posted by mhz at 7:10 AM on May 13, 2015


This is probably a naive question, but if its that easy to buy a building and avoid eviction for a few years, why don't tenants get together and do it?

It's an incredibly naive question.

Because poverty.

Because systemic institutional racism.

Because having as little as a few thousand dollars of working capital and the knowledge that the system even can be gamed--let alone an understanding of how to game it---are some of the things packed into the privilege knapsack [PDF].
posted by dersins at 7:54 AM on May 13, 2015 [3 favorites]


This is probably a naive question, but if its that easy to buy a building and avoid eviction for a few years, why don't tenants get together and do it?

Partly because there's a lawyer-level of knowledge needed to do it, and the maneuvers this particular landlord performed in his building takeovers are well into the grey area, and civil or criminal punishment is the risk the landlord is absorbing in his maneuvers in taking over each building. And while they buy the right to the loan for a few thousand dollars, they have the money to buy the full building (and also the money to defend themselves against disputes with tenants, the city, the state, Feds, and the bank they are screwing.)
There's an element of defrauding the bank holding the mortgage here, to make a complex process easy to understand.
Average people, tenants, don't like to risk fraud charges, nor do they have the kind of capital needed to back these kinds of risky maneuvers.
posted by littlewater at 10:58 AM on May 13, 2015 [2 favorites]


I don't want to play into stereotypes, but the Orthodox/Hasidic community in NYC has an established infrastructure of administrative resources for real estate specifically unlike most communities and definitely unlike most poor communities. Developers, realtors, mortgage brokers, lawyers, all with close familial or community ties, working in community business efforts and dealing often with one another. I work peripherally to NYC real estate industry and the Orthodox/Hasidic part of it is tightly interconnected and dug in deep.

Obviously, the great deal of them work aboveboard (my Orthodox Jewish lawyer and mortgage broker certainly do) but many members of the community -- you know, just like literally any community -- are absolutely fearless about fraud and have no regard for the law. If you read Failed Messiah at all, there are Hasidic and Orthodox real estate companies/families/syndicates going down for hardcore fraud all the time. And for every one that goes down, there's dozens that never will because they know how to bend the rules just right or break them in ways no one who can punish them really cares about.

So can a group of poor tenants do what you're saying? Technically, sure. But it would often be a Herculean effort to so much as even summon useful administrative resources to do so before you even get to raising capital, getting approvals, not running afoul of the law, etc.
posted by griphus at 11:22 AM on May 13, 2015 [5 favorites]


Basically, the guy in the article makes it look easy, but unless you're knee-deep in real estate it to begin with, it very much is not.
posted by griphus at 11:24 AM on May 13, 2015 [1 favorite]


This is probably a naive question, but if its that easy to buy a building and avoid eviction for a few years, why don't tenants get together and do it?

It's an incredibly naive question.


No one has yet mentioned the (probably immense) difficulty of coordinating such a collective action. The question is not so much "naive" as "willfully obtuse".
posted by Steely-eyed Missile Man at 11:27 AM on May 13, 2015 [2 favorites]


I was much more shocked by the fraud the landlord admitted in the article than the racism.
You'll end up in jail much faster through defrauding a bank than discriminating against black people.
But now knowing this kind of fraud is pretty commonplace, people get brazen in admitting it, even to the media.
These kinds of fraudulent actions really make me root for the banks, a real plot twist!
posted by littlewater at 11:55 AM on May 13, 2015 [1 favorite]


This is probably a naive question, but if its that easy to buy a building and avoid eviction for a few years, why don't tenants get together and do it?

The article details two different businesses Ephraim has been involved in. The first is buying deeds from borrowers with under-water mortgages, then renting out the property until the bank forecloses or the mortgage becomes worthwhile to pay off (as an aside, this does not directly involve gentrification). The second is purchasing, at market value, multi-residence housing with black tenants in rent-controlled apartments, then paying the renters to move out, thus enabling both gentrification and decontrol of the rent.

Now the only people who need worry about eviction are the borrowers: the renters have a good thing going, which is why they can get $20-30K if they know their consent is worth it. But the borrowers are already in more debt than they can handle, so how can they afford to buy the building - they're going to collectively remortgage? Nor can they buy deeds that they already own. Contrariwise, while the renters probably could collectively buy their own building, they don't need to. If you clearly distinguish between 'borrowers' facing eviction and 'tenants' who are not, I believe that will dissolve the question.

The question is not so much "naive" as "willfully obtuse".

Between this and the intimation that Hasidim are exemplars of white privilege, I'm impressed and not a little disturbed by how facilely ideological explanations such as these were invoked - to the extent, obviously, of not treating the original question seriously enough to see anything internally inconsistent about it.
posted by topynate at 1:52 PM on May 13, 2015 [1 favorite]


I don't understand why people think the buyer of the deed is defrauding the bank. They aren't deceiving the bank, the collatoral is the building, they don't sign any promissory note they just collect rent till foreclosure comes. In that 'scam' the main skill required is making people pay rent who don't have money. If there was fraud it was when the ridiculous loan was written. As to why can't the tennants get together and buy the deed, there isn't any point even if they had the wherewithal as the building is worth less than is owed on it, its only worth what the bet that you can get rent till foreclosure takes it away from you is worth, if that makes sense.
posted by Pembquist at 3:49 PM on May 13, 2015


The reason they are defrauding the banks is because the new "owner" (such as the subject of the article) is usually not paying anything on the mortgage (because foreclosure proceedings make payment moot) BUT is still collecting rents. Often laws say rents - especially Section 8 rents - either cannot be collected or must go to the bank.
It varies state to state and bank to babk but that's the fraud angle. Collect rents on a building you aren't paying for.
posted by littlewater at 7:33 PM on May 13, 2015 [1 favorite]


I think "Ephraim" is a secret humanitarian. Consider: he's promoting, in an exciting and effective way, the knowledge that existing tenants are being exploited by gentrifying landlords. He's giving them the invaluable knowledge that the landlords are willing to pay much more than they offer, including actual figures. Where else will they get that information?

And where does Ephraim's profit principally come from? White people who don't want to live near blacks - they already had the option of living in those apartments at a lower rent. In other words, Ephraim is exploiting racists.

The mortgage fraud thing is very bad, of course, and he shouldn't do that, but it sounds like that's a decreasing part of his business. And anyway - that's exploiting banks! So give Ephraim The Class Warrior a break: he's hitting the bad guys where it hurts. If he could only figure out a way to exploit misogynists he'd be like the MeFi zeitgeist incarnate.
posted by Joe in Australia at 8:27 PM on May 13, 2015


Ephraim is exploiting racists.
but not nearly as badly as he's exploiting black people.

and also not nearly as much as he's catering to their racist desires by creating the spaces where racists want to live.
posted by Jon_Evil at 9:45 PM on May 13, 2015 [1 favorite]


What is illegal is the whole 'not renting to black people' thing, which breaches the Fair Housing Act. Buying title to property encumbered by a mortgage and collecting rent on it until the bank initiates foreclosure is legal, although it generates no value and is certainly to be frowned upon.

Bear in mind that New York only has 'true' mortgages with two parties, the borrower and lender, and doesn't allow deeds of trust where the title resides with a third party. Buying a property creates no contract with the bank; the property just comes with a lien on it. Until the bank decides to exercise its rights (which in New York requires obtaining a judge's order), the owner can do what he wants with it, including renting it out.
posted by topynate at 8:46 AM on May 14, 2015 [1 favorite]


Interesting. So a NY lien is just the right to sue for foreclosure?

In Australia a lender's caveat on a property title (I think it's similar to a lien) means that a mortgaged property cannot be transferred without the bank's consent. So in effect, the lender needs to be repaid before a property is sold. Sometimes the purchase will be financed through a mortgage simultaneously arranged via that lender, but in that case the purchaser is now liable for repayment.
posted by Joe in Australia at 4:24 PM on May 14, 2015


This is probably a naive question, but if its that easy to buy a building and avoid eviction for a few years, why don't tenants get together and do it?

Tenants don't need to get together to do it. There are tenants who avoid eviction for long periods of time by using or abusing tenant's rights laws. There was the AirBnB disaster story of the renter who managed to stay long enough to become a "tenant" by law (often only 30 days) and then stuck around for another six months (or was it a year?).

There are also individual homeowners who employ shenanigans to stay in their houses long after they've stopped paying their mortgage. One scam involved selling 10% of the house to a shell company that would declare bankruptcy; straightening out the bankruptcy would take six months during which no one could be evicted.

The system simply isn't set up to deal quickly with people who are smart, organized and utterly without morals, whether they are owners or not.
posted by musofire at 8:44 PM on May 14, 2015


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