Wednesday, February 9, 2011

A court that stopped a selloff at HUD

Further to "predatory equity":

Last September the U.S. Third Circuit ruled in Massie v. HUD that HUD couldn't foreclose and sell off the Third East Hills former housing project in Pittsburgh without preserving the Section 8 contract that kept many of the existing residents housed. The Pittsburgh Tribune-Review explained:
The appeals court said U.S. District Judge Donetta Ambrose should not have dismissed the case in 2008 in favor of the U.S. Department of Housing and Urban Development because the former shareholder residents of Third East Hill Park have evidence that HUD lied about its reason for foreclosing on their homes.

The agency said in 2006 that it was foreclosing on the homes because tenants had failed to keep up the properties. The tenants claim HUD foreclosed so it could sell the property to the Urban Redevelopment Authority, which sold it to a private developer that has a HUD-funded project to build subsidized housing.
The Housing Justice Network of the National Housing Law Project, which helped with the class action suit, has a case summary with links to the opinion and an amicus brief.

The opinion is kind of a case study in how forcible privatization violates HUD's alleged mission of keeping people indoors. Here, the court quotes HUD turning up its nose at its own subsidized tenants:
"The local HUD office sent a memorandum, also on
November 10, 2004, to HUD’s Atlanta Multifamily Property
Distribution Center, recommending foreclosure on the property.
The memo included the prior inspection reports and other
documentation. It also included a document entitled “Field
Office Foreclosure Recommendation,” which described the
property. The Recommendation noted that the property adjoined
two other affordable housing developments, which had both
been sold to developers, who were awarded low-income tax
credits and would be improving those properties. According to
the Recommendation, Third East Hills Park, in its current
condition, would negatively affect the success of the other
properties. The area was described in the Recommendation as
“heavily impacted with subsidized housing.”..."
For the residents doing the "impacting", who have been facing this mess since 2004, the outcome could be hefty relocation assistance, and if so, about time.

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