NYS, NYC Pension Funds Find Their Way Into Investments In Private Equity Outfit Accused Of Predatory Lending, Unnecessary Foreclosures; City Advocate: Municipal Workers' Retirement Cash Is Being Used Against Them To Foreclose On Their Homes

In New York City, WNBC-TV Channel 4 reports:

• Despite a pressing need for more affordable housing in New York, the state's public retirement funds have invested more than $1 billion in Lone Star, a private equity company accused of predatory lending and unnecessary foreclosures, an I-Team investigation has found.
  
  According to a lawsuit filed by several homeowners in southeast Brooklyn and Queens, Lone Star has purchased large portfolios of distressed mortgages insured by the Federal Housing Administration. But instead of considering typical FHA modifications -- like interest-rate reductions or loan balance reductions -- Lone Star is accused of offering mostly loans with interest-only periods and balloon payments.
  
  Karen Morrison, a retired NYPD officer, says Lone Star offered her father one of the interest-only modifications when he fell behind on his mortgage payments two years ago. Now she says she's afraid he won't be able to afford the balloon payment when the interest-only period is up.
  
  "It's like four generations that live in the household and if we cannot afford to pay when the interest-only payment is up, we're all going to be out on the street," said Morrison.
  
  On top of the stress of potentially losing her family home, Karen Morrison said it was “like a shocker” to hear her own retirement fund, the New York City Police Pension Fund, has invested more than $100 million in Lone Star, the very company that may one day foreclose on her father's house.
  
  “It’s almost like I co-signed it,” she said.
  
  After the I-Team contacted NYC Comptroller Scott Stringer to ask about the Lone Star investments, Stringer wrote a letter to Lone Star Chairman John Grayken, expressing concern about the interest-only loan modifications.
  
  “This kind of predatory lending is unacceptable,” Stringer told the I-Team. "When a company acts more like a predator, rather than an investor, we have serious questions of that company and we are now in the process of hunting down those answers."
  
  Public Advocate Letitia James is another city official who has expressed concern about city retirees investing in Lone Star. Last year, as a Trustee on the Board of the New York City Employees Retirement System, James successfully opposed an opportunity to make further investments in Lone Star. She said it is ironic that a cop or sanitation worker could face foreclosure at the hands of the very company financed by their own retirement savings.
  
  “Basically, municipal workers in the city of New York – we’re taking their money and using it against them and foreclosing on their property,” James said.
  
  [...]

For more, see I-Team: NY and NYC Pension Funds Invest in 'Predatory' Lender (“Basically, municipal workers in the city of New York – we’re taking their money and using it against them and foreclosing on their property,” the city's public advocate said).