NYC Federal Judge Halts Eviction Of Low Income Tenants In HUD-Owned, Mortgage Fraud Affected Buildings

In New York City, The New York Sun reports:

• A plan by the federal government to sell thousands of subsidized housing units in New York to private developers has suffered a setback, after a federal judge ruled Thursday that tenants facing eviction had been denied any explanation or opportunity to challenge their removal. At issue are eviction notices from the Department of Housing and Urban Development ["HUD"] to residents living in low-incoming housing, mostly in Harlem and the Bedford-Stuyvesant section of Brooklyn. A judge in Brooklyn, Frederic Block of U.S. District Court, said the notices violate the Constitution's guarantee of due process by failing to explain the reason for the evictions. Additionally HUD the agency must provide tenants with an avenue to contest them, Judge Block found.

The federal government ended up stuck with the buildings following large-scale mortgage fraud by real estate operators who obtained HUD-insured mortgages secured by the buildings, and then stiffed the lenders out of their mortgage payments, abandoning the buildings and allowing them to fall into foreclosure For more, see HUD Suffers Setback in Plan To Sell N.Y. Properties.