U.S. Rep. Ritchie Torres is touting the finalization of a real estate loan portfolio sale last month after Signature Bank failed last spring — saying more than 19,000 units of Bronx housing are out of the hands of potentially careless developers and now belong to investors who prioritize affordable housing.
Torres sounded the alarm after New York City’s Signature Bank was the latest in a string of big bank collapses to send ripple effects through the economy in March 2023. Signature Bank, which championed cryptocurrency lending, closed its doors last spring after California-based institutions Silicon Valley Bank and Silvergate Bank — also big digital and crypto dealers — fell a few weeks prior due to instability with crypto deposits, customer withdrawals and plummeting stock prices.
Signature Bank’s loan portfolio — part of the bank’s assets at the time of its collapse — was particularly worrisome for Torres, since the bank served as a major real estate lender in the city. He cautioned that the loans in the Bronx and other boroughs could be sold to a buyer who “brings greater disinvestment and displacement,” or that the properties will be refinanced at higher interest rates — which he said “could mean less money for the maintenance” of the properties themselves.
The Federal Deposit Insurance Corporation (FDIC), an independent agency created by Congress to maintain stability and public trust in the country’s financial system, was responsible for selling the residential New York City loans after Signature Bank’s failure.
“When New York City sneezes, the Bronx gets the flu,” Torres told the Bronx Times in an interview earlier this month. “And nowhere more so than on the issue of housing.”
But the warning bells quit ringing last month after the loan portfolio was sold in three parts, and Torres said he’s happy with the buyers.
“I persuaded the FDIC to partner with state and city housing policy makers to put in place a process that preserves up to 80,000 units of affordable housing [across the city] and that protects the hundreds of thousands of tenants who live in those units,” he said. “And I’m pleased with the end results.”
The FDIC sold the first lump, $16.8 billion in commercial real estate loans, on Dec. 14 to alternative asset manager Blackstone’s affiliate Hancock JV Bidco LLC. The second $5.8 billion chunk of loans was sold to the Community Preservation Corporation, a national nonprofit lender and investor, in two transactions on Dec. 15. Then on Dec. 20, the FDIC sold the last $9 billion sum of loans collateralized by rent-stabilized or rent-controlled properties to SBNA Investor LLC, which is controlled by Santander Bank.
The local policy makers Torres connected to the FDIC included the New York State Homes and Community Renewal, the NYC Chief Housing Officer, the NYC Housing and Development Corporation, the Association for Neighborhood and Housing Development — as well as Rachel Fee, the executive director of the New York Housing Conference, and Jim Buckley, the executive director of the University Neighborhood Housing Program.
Benny Stanislawski, the communications director for Torres’ office, confirmed with the Bronx Times that the three December sales account for all of the now-failed Signature Bank’s outstanding loan portfolio.
“I think we’ve set a precedent for the FDIC prioritizing affordable housing when it comes to selling bank assets,” Torres said. “The process could have had an unhappy ending.”
Reach Camille Botello at cbotello@schnepsmedia.com. For more coverage, follow us on Twitter, Facebook and Instagram @bronxtimes
