the building in 2007, it had accrued 361 violations from the city’s Department of Housing Preservation and Development (HPD). He says he was shocked by the tenants' living conditions: “It was just awful. There were vermin, mold, and a hole in one of the walls that went straight through to the hallway.”Until a court-appointed administrator was named to care for the building in March, the residents of 1328 were passengers on a ship without a captain. With landlords that refused to make lasting repairs, the tenants lived for five years under a leaky, porous roof, with mold on their walls and ceilings, mice in their bedrooms, roaches in their kitchens, and poisonous lead-based paint on their walls. The locks on the front door were busted; drug users would creep into the building to get off in the basement.
“I had so much mold in my bedroom that it was black, looking at me, talking to me, moving,” said Socorro Medina, 49, who has lived on the third floor for 13 years.
It was never a palace, but 1328 had been decent affordable housing for some of Bushwick’s low-income residents for decades, having come under rent stabilization in 1984. Tenants say that changed in 2003 when a man named Kharl Pinnock, at age 25, bought the building for half a million dollars. With a good credit score and no collateral, Pinnock was given a six-figure mortgage and became the landlord of a multi-family apartment building.
“Mortgages were different back then, they just wanted you to sign your name,” Pinnock said recently.
“I wasn’t prepared for the responsibility.”
Pinnock says that a friend from a mortgage company approached him about buying 1328, but neglected to tell him that the property was rent-stabilized, a crucial distinction for a real estate investor that means that the tenants have a legal right to renew their leases each year or two years at no more than a certain percent of increase, as determined by the city’s Rent Guidelines Board. More than a third of the rental housing stock in Bushwick is rent-regulated.
The rents Pinnock received were just enough to cover the loan he had taken on the property. But his neglect of the building’s maintenance soon cost him his mortgage payments. Under the leadership of Socorro Medina—“the headache from the third floor,” Pinnock calls her—the tenants began withholding rent when repairs went undone. Pinnock says that he couldn’t afford to make repairs when the rents he received were so low, and that some tenants failed to pay their rent at all.
They also bombarded 311 with complaints about the unsafe living conditions. If it was so bad, Pinnock thought, why couldn’t they just move out? “I guess she wants to die in that building,” he said of Medina, who won a judgment of $125,000 against Pinnock for an injury she received when a window fell and crashed on her head.
Material misrepresentations
After the bank foreclosed in 2005, “I never ever went back there. I walked away like a dog with its tail between its legs,” says Pinnock.
According to the bank that ended up holding Pinnock’s mortgage, he never should have been given a loan at all.
Lehman Brothers, the now-failed investment bank, took a controlling stake in one of the country’s largest originators of subprime mortgages, Aurora Loan Services, in 2003. Lehman bundled the mortgages into securities and sold them to investors.
Aurora had a “loan purchase agreement” with Pinnock’s friend’s brokerage firm, D&M Financial Corporation, to buy the loans D&M issued in the booming tri-state area real estate market.
It was D&M that approved Kharl Pinnock’s purchase of the Gates Avenue building in 2003. In December 2004, Aurora sued D&M for fraud, claiming that Pinnock, among 27 others, had received a mortgage on the basis of “false and misleading documentation” provided by D&M.
Later, in the spring of 2006, an internal audit of Aurora’s books found that up to half of the loans inspected contained “material misrepresentations,” or fraud, according to a report in The Globe and Mail of Toronto. Aurora had originated $25 billion in loans that year.
More than one-third of Bushwick’s rental units are under some sort of rent regulation, and as the neighborhood’s gentrification accelerated in this decade, speculators have had a financial incentive to force tenants out, sometimes through neglect and intimidation.
(For much more on the neighborhood, see the new issue of City Limits Investigates, 11237.)
Bushwick had a rate of 193 serious housing code violations per 1,000 units in 2007, 8.5 times the rate in the nearby Williamsburg and Greenpoint sections of Brooklyn. The neighborhood has held the dubious distinction of being number one in visits from housing inspectors almost every year in the 2000s, according to the Furman Center for Real Estate and Urban Policy at NYU.
Changing hands
With 1328 now in the hands of Lehman, the tenants were left to fend for themselves. Sometimes the city came to deliver gas during the freezing winters, other times Socorro Medina and the rest would pool their money for fuel to heat their homes, and sometimes they just went without.
“It used to be very cold, the kids always had a cold, and would get sick,” said Sonia Crespo, a second-floor resident for nine years. To heat the apartment, Crespo said, “I had to warm up the stove.”
The city periodically hired contractors to make emergency repairs but lacked the budget or legal authority to make systemic renovations.
In August 2006, unknown to the tenants or the city agencies that helped pay some of the tenants’ rent, some of whom received public assistance to help pay their rent, Aurora sold the building to a company called Narcarta Holding Corp. for $397,000. The next month, Narcarta sold the building to Beverly Britton for $790,000.
“This Beverly Britton person just came out of nowhere,” said Judy Medina, Socorro’s daughter, who lives on the second floor with her son. ”We never seen her, we don’t know about her, we don’t know anything about this lady, they just gave us court papers talking about they’re gonna kick us out of the building.”
