A heavily pregnant Catherine Nunez had to rush to court to prevent eviction from her apartment at 1 Jacobus Place in Marble Hill just one day before she was scheduled for the Cesarean section of her fourth child in early November 2013.

Nunez's landlord, Moshe Piller of One Jacobus Place LLC, was trying to evict Nunez from her apartment after she withheld one month of rent. Nunez, frustrated after her toilet remained clogged for almost a month, had had enough and refused to pay. At the time, her three small children could not use the bathroom, and the superintendent failed to send someone to fix it. "All the water used to come out, with everything on the floor," says Nunez. "It was disgusting!"

The toilet, which was finally fixed, is one of many complaints that Nunez has about her apartment. The front door is cracked and chipped. The bedroom door is unhinged, door knobs have fallen off and there are many cracks on walls throughout the apartment. Furthermore, the bathroom has routine water leaks when it rains, resulting in more damage each time. "The water starts leaking, and the walls start having bubbles, and cracking, [and the ceiling] starts falling down," says Nunez. "It's terrible, and every time it rains, it happens."

Nunez is not the first tenant to complain about Moshe Piller, who did not respond to requests for comment. In 2010, a Huffington Post article reported that Piller’s tenants had "taken him to court more than 95 times in Brooklyn and the Bronx since 1989." In 2010, Piller was the focus of a four-month investigation by the news site BrooklynInk.

Yet on July 31, 2012, Flushing Savings Bank issued a Mortgage Consolidation, Modification, and Security Agreement in the amount of $4,875,000 to One Jacobus Place LLC, signed by Piller as the sole member and manager.

In a city dominated by renters, bad landlords get their share of bad press in New York. In the 1970s the Village Voice began running an annual list of the 10 worst. Bill de Blasio, during his time as public advocate, maintained an even longer list. Every day in housing court, tenants and landlords battle over rent and repairs.

But behind every landlord there is a bank—whose lending enables the landlord to purchase or refinance a property where other people live. Housing advocates have for decades pressed banks to take a more active role in making sure landlords adhere to the "good repair" clauses that are part of mortgage boilerplate. Now, there is a new push for more accountability by banks.

In a September circular to all banks, the state's Department of Financial Services reported that, "the number of affordable multifamily properties considered in physical and/or financial distress has been rising in New York State." DFS said it was considering a new approach to bank examinations that looks more closely at building conditions.

New concerns and new tools

In the last decade, dozens of buildings in poor and working-class neighborhoods became the focus of speculation by investors who believed gentrification would soon bring richer renters and higher rents, and who paid lavish sums to purchase them—putting the buildings under financial strain, often reflected in deteriorating maintenance. This only amplified concerns about the role of banks in distressed properties.

"Banks and a lot of nonbank lenders were making unsustainable loans which led to a lot of harassment and then, when the economy collapsed, a lot of the loans went bust and they stopped taking care of the properties," says Jaime Weisberg, an advocacy associate at the Association of Neigborhood Housing Developers.

ANHD's executive director Benjamin Dulchin agrees: "In the run up to the financial crisis sustainable lending standards were largely thrown out the window."

This led advocates to shift their strategy around building conditions; besides targeting the landlords, they began taking their concerns to the banks as well.

One organization dedicated to preserving affordable housing, the University Neighborhood Housing Program in the Bronx, compiled a list of all the residential properties in the city and tallied the number of housing code violations as well at the debts owed on mortgages and taxes, and generated a score. Called the Building Indicators Project, its aim was "to have an impact on the quality of housing in our neighborhoods by holding banks to account for the type of multifamily lending they do, and by enabling housing organizers and advocates to do their jobs more effectively", according to Gregory Jost, UNHP's deputy director.

Banks helped to create the tool. "It was critical to get buy-in from lenders from the beginning so that they see the data as accurate and meaningful in what it's measuring: specifically, levels of physical and financial distress," Jost says.

Focus on 'distressed properties'

The BIP gives every building in the city a score based on their debts and code violations. A BIP score over 800 are considered an indicator of distress. According to an edition of the BIP released in November, some 1,600 residential buildings citywide comprising 36,000 apartments have scores of 800 or higher.

Using the same BIP database, the Association of Neighborhood Housing Developers, an advocacy group for the nonprofit affordable housing industry, recently reported on buildings that have a ratio of 1.5 serious violations for every unit. Serious violations are those with a B or C rating from the city.

ANHD found that nearly a quarter of the residential buildings in some banks' local portfolios could be considered distressed.

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Commercial and savings banks financing buildings with a 1.5:1 ratio of serious HPD violations to units
Source: ANHD
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Because of the size of their real-estate holdings, Chase, Capitol One and Flushing have the most buildings on the list.

A survey by a team of reporters this fall of buildings associated with those banks found different circumstances but common themes—troubled landlords, tenants with little recourse and poor conditions.