Clueless Out-Of-Town Landlord Abandons Mismanaged Units After Overpaying For 19 Buildings; Leaves Living Hell For Poor, Displacement-Fearing Renters

In Cincinnati, Ohio, The Enquirer reports:

• In Avondale, Tawana Riley battles daily with roaches, bed bugs and faulty electrical outlets. In Over-the-Rhine, residents at The Senate Apartments on 12th Street have been plagued by a rat infestation and broken plumbing that backs up sewage.

• And in Walnut Hills, Alexander Bailey has struggled for three years to keep water from leaking into his apartment when it rains. "Something has to be done," says Bailey. "We're paying the rent every month and the government is paying, but nothing is getting done. Where is all the money going?"

• Their homes are among nearly 700 units of low-income housing across Cincinnati left to crumble after their owners, Brooklyn-based NY Group, bought them three years ago and then fell into foreclosure in July 2010. Purchased at the peak of the housing market for $21.5 million, the 19-building portfolio of affordable rental housing spans nine Cincinnati neighborhoods and includes apartment communities in Evanston, Mount Auburn, Paddock Hills, East Price Hill and Sedamsville.

• The case illustrates how the impact of nation's foreclosure crisis is spreading beyond over-leveraged homeowners and into the country's most fragile housing stock: low-income rental communities that were purchased at peak of the market by speculators and investors.

• Residents say major problems began at their homes after NY Group took over in 2007. Since the foreclosure filing, repairs to the buildings have become the responsibility of lending giant Fannie Mae, the mortgage holder for the financially ailing properties. The lender says it has spent hundreds of thousands of dollars to address outstanding code violations and city work orders that went unattended to under the NY Group's watch. But residents and others say the buildings remain in unacceptably poor condition.

• "The NY Group was not interested in making repairs and neither is Fannie Mae, it appears," said Marcheta Gillam, a lawyer at the Legal Aid Society of Greater Cincinnati. For Riley, Bailey and the 653 other Cincinnati families renting from the NY Group, foreclosure means an uncertain future; there's no guarantee they can stay in their homes once they are sold.

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• In Cincinnati, NY Group bought its 19 buildings in 2007 from downtown-based Downtown Property Management Inc. Soon after, work orders for roof repairs, leaky kitchen faucets and litter control began to pile up, said Ed Cunningham, manager of Cincinnati's property maintenance code enforcement division. Since the July foreclosure filing in Hamilton County Common Pleas Court, Cunningham's department has received calls for collapsed ceilings, electrical fires, and mold.

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• "These residents and buildings are being abandoned, and it's the communities that get stuck holding the bag," Gillam said. "We get stuck with the blight. We get stuck with the unhappy, desperate families that are left wondering if they're going to be displaced."

• Gillam is representing the tenants who are fighting to be heard in the foreclosure case pending against their homes. Currently, the tenants are not considered a party in the foreclosure case.

For more, see Upkeep neglect bedevils tenants (Renters suffer in foreclosures).