Black homeowners in Central Brooklyn are losing their homes at an alarming rate, and the main culprits are deed theft and the city’s controversial Third Party Transfer Program.

As of March 2019, there were at least 6,000 foreclosures pending in Kings County with more are on the way, according to Catherine Isobe, senior staff attorney at Brooklyn Legal Services. Bedford-Stuyvesant, Crown Heights and East New York have some of the highest rates of real estate fraud, along with Canarsie and Flatlands, according to legal advocates

Slide shown a the Hearing at NYC Committees on Housing and Building & Oversight and Investigations on July 23, 2019, of the number of properties selected by HPD for seizer under TPT in round 10

Residents may feel like the two offenders are one in the same. But while both result in similar outcomes, Third Party Transfer and deed theft are two separate concerns.

What Is Third Party Transfer?

Third Party Transfer is a city program in which “distressed” vacant or occupied properties are foreclosed by the city and given to a qualified sponsor, a nonprofit or for-profit building developer, to rehabilitate it for affordable housing.

NYC Housing Preservation and Development launched TPT in 1996, when abandoned buildings were a common sight in New York. The central motivation was to collect unpaid taxes and bills from negligent landlords and foreclose derelict housing units, fix them up, and rent them out to tenants at low- to mid-incomes.

In recent years, the program has led to black homeowners and other small property owners in Central Brooklyn neighborhoods losing their homes over unpaid bills at a mere fraction of their properties’ value, sparking calls of outrage about the “overly broad and improper” use of the TPT program.

Many of the Crown Heights and Bed-Stuy homeowners who lost or nearly lost their homes are senior citizens who had made clerical errors. Others have lost millions of dollars worth of equity to the city for issues as minimal as late payments for water bills.

“This program, which was supposed to be used to help preserve affordable housing, has been a subterfuge to remove properties from homeowners who had their properties, in some cases, for more than thirty years,” said Brooklyn Borough President Adams who has helped lead the charge to investigate and curb the program.

Slide shown a the Hearing at NYC Committees on Housing and Building & Oversight and Investigations on July 23, 2019

Other elected officials calling for an investigation and reevaluation of the program include Councilmember Robert Cornegy of Bed-Stuy and Crown Heights, who argues the difference between the properties’ values and the charges owed to the city are grossly disproportionate; and State Senator Velmanette Montgomery, whose “Deed Theft Bill” aims to grant greater protections to home-owners either in default or foreclosure. Montgomery’s bill currently is pending Gov. Cuomo’s signature.

A $66 million ongoing lawsuit against HPD claims the TPT program is illegal. Pending this lawsuit, the program may be halted or reversed and the question of reparations would likely follow.

HPD, on the other hand, maintains that the program is a success:

“In addition to being an effective tax enforcement program, TPT has become a critical tool for protecting tenants, and is one that we can’t afford to lose in the midst of a dire affordability crisis,” said HPD commissioner Louise Carroll, as reported in the Brooklyn Daily Eagle.

What Is Deed Theft?

Instances of mortgage fraud or deed theft have swept through Brooklyn in recent years. Unlike TPT, deed theft is an outright illegal activity and punishable by law. Several activities may fall under the umbrella terms “mortgage fraud,” “deed theft” and “deed fraud” but an easy way to understand them is they occur primarily through deception.

Identity theft, scams, someone posing as a borrower, someone misrepresenting financial information — these are a few of the most common ways mortgage fraud and deed theft can manifest.

Scammers often target the elderly or homeowners who speak English as a second language, because they may be easier to manipulate. Scammers also target homeowners in financial distress, in debt or falling badly behind on taxes and bills, because they may be desperate for a quick fix to their monetary troubles.

Targeted homeowners may be aware of the threat of TPT and will take offers from schemers in order to avoid home foreclosure.

It is possible that scam artists are exploiting the confusion and tension surrounding the city’s TPT program, invoking it as an imminent threat while making offers, in order to steer homeowners into bad deals.

A recent example of deed fraud involves a man who had been tricked into selling the deed to his $1.5 million dollar home for $650,000 to a man claiming to help him with his debts.

In another instance, someone hired to care for an 85-year-old diabetic man convinced the senior to sign away the deed to his East New York home. The caretaker was indicted for grand larceny and identity theft in January, according to Gothamist.

If you are a homeowner in default or foreclosure, familiarize yourself with the rights granted to you under the Home Equity Theft Prevention Act (HETPA). The act means to protect you from illegitimate buyers.

And as always, maintain a healthy degree of skepticism if anyone shows up suddenly, offering to help you with financial problems.

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Charlie Innis

I am a freelance writer and editor based in Bushwick with bylines in Spin, Stereogum, the Billfold, and the New School Free Press. If you want to hear me talk nonstop for hours, ask me about Clarice Lispector. Reach...

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  1. Thanks for covering this issue. I hope further pieces can dig alot deeper though. What is the role of local politicians? Does hpd just independently select and take homes? Is tpt done thoughtlessly– to nondistressed homes, homes that are not behind in taxes (at all, and only marginally), in cases where homeowners are not notified that this is happening– really that different from deed theft? Sure, tpt has protection by the law, but does that necessarily make it that different from theft? It probably doesn’t feel that different if you’re experiencing it. Also, are deed theft and tpt really the only causes of homeowner displacement? What about damage done to adjacent homes by sloppy development? What about reverse mortgages? What about constant harassment to sell? And how do these processes (especially as they happen disproportionately in black and brown gentrifying communities) connect to the city’s dependence on developers and real estate capital?

    Thanks for beginning this work!

  2. This is deplorable. We’re the houses stolen then sold? Investigate and publish. Politicians have known about this, done nothing.

  3. You need to look closely at “NYC Local Law 15″…I have used it in court on these thieves..No one in NYC is aware of this law! It has only been used once in the civil court…Take a good look!

  4. So many unanswered questions. The pols dropped the ball on this situation. The situation with Judge Philips was just a symptom. This situation should be all hands on deck for the electeds but…the assemblywoman (wright) is promoting hair products and advocating for white constituents having problems with the Air BnB police. Cornegy is contemplating running for Boro Prez. He hosted a meeting with
    Harlemites and others facing same problem. Did you get an invite? neither did I. What about the slumlords and people losing their apartments, they are people too. I am sure they saw this coming and neglected to do anything Now its going to be a platform for an upcoming election

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