Courts roundup: $21M Nolita pre-foreclosure, HRI claims Sec. 8 discrimination, more

$21M pre-foreclosure on Nolita commercial condos: Rialto Capital Advisors as special servicer for bondholders of the Morgan Stanley Capital I Trust 2019-L2, filed to foreclose on a loan with an original principal of $21 million and secured by two commercial condominiums at 199 Lafayette Street in Nolita owned by Edmond Li’s Veracity Equities. Li bought the units in 2003 for $4.996 million, according to property records. According to the complaint the 10-year loan was signed February 6, 2019. “By notice dated July 21, 2020 (the “Notice of Default”), Plaintiff, through Special Servicer, notified Borrower and Guarantor that an Event of Default existed under the Loan Agreement as a result of, inter alia, Borrower’s failure to remit payment to Plaintiff all sums payable on the May 6, 2020 Payment Date and each Payment Date thereafter.” No response papers have yet been filed by Li or Veracity. Some borrowers state that a foreclosure process must be initiated in order to restructure securitized loans. LINK

Court filings are the positions of one party and may not be accurate or complete.

HRI alleges Section 8 housing discrimination: The affordable housing advocacy group Housing Rights Initiative filed a detailed 52-page complaint alleging frequent housing discrimination against renters who utilize Section 8 housing vouchers. The complaint details calls with brokers and other landlord representatives in which they tell HRI representatives who state they want to rent an apartment using Section 8 vouchers that they need income equal to approximately 40 times their rent. The complaint says that individuals with housing vouchers almost never meet that threshold since they are typically low-income in order to qualify for the vouchers.

In the complaint’s words: “Defendants knew, or should have known, that their use of minimum income requirements on voucher holder applicants would result in the exclusion of virtually all voucher holders from their properties, and that these requirements violate the New York State Human Rights Law and the New York City Human Rights Law because such requirements discriminate against individuals on the basis of lawful source of income.”

In addition, HRI claims it was itself harmed by the defendants’ actions, claiming that, “Not including the time spent investigating using testers, HRI’s staff expended more than 240 hours on education and outreach. Defendants’ discriminatory policies and practices have diverted HRI’s resources away from its organizing, counseling and referral services in order to address the rampant source of income discrimination that is pervasive in New York City. For example, during 2020 and 2021, HRI had expected to organize and counsel a sufficient number of tenants such that at least2,000 housing units across New York City would be returned to affordability as a result of HRI’s efforts. Instead, HRI was forced to spend resources combatting Defendants’ source of income discrimination, causing HRI to fall approximately 50% short of its goal.” LINK

Pre-foreclosure filed on Flushing parcel with $5.3M in debt: Lender JLM Capital on May 6 filed to foreclose on a loan with an outstanding balance of $5.26 million secured by 134-47 Maple Avenue in Flushing, Queens. Elizabeth Chen, declaring as sole member of the owner entity, recorded a restrictive declaration in April 2022 on the property, stating it was not to sell, mortgage or otherwise encumber the property without her consent. LINK

Belltell Lofts condo board sues developer for $10M: The board of managers of the Belltel Lofts at 365 Bridge Street in Downtown Brooklyn on May 5 sued the developer of the property for $10 million, alleging construction defects, among other issues. LINK