Housing Scams

Brooklyn, NY —

This summer, a thirteen year old boy was allegedly murdered by two young squatters who thought he had stolen a dollar. Patrick Bhola's body was found in a vacant building in Bedford Stuyvesant. As WNYC's Beth Fertig reports, housing scams in the neighborhood are leaving more properties at risk of abandonment.

There are votive candles now outside 731 Greene Avenue. On the lawn, there's a broken door with the words "Peace Patrick Bhola" written in red.

These makeshift memorials are a tender contrast to the neglected three family house behind them, surrounded by overgrown trees and garbage. But it wasn't until the murder that residents of this northeast corner of Bedford Stuyvesant knew the shabby white house had been taken over by squatters.

MAN: Because I didn't know nobody was living there, I thought it was abandoned.
WOMAN: I never knew that the building was abandoned because I used to hear music and everything in there.

731 Greene Avenue doesn't look like a typical abandoned building. The windows are not boarded up. And there are mailboxes on the door. But no one has officially lived here in years. The owner hasn't paid his mortgage since 1999. And a bank is now in foreclosure proceedings to take over the property.

The owner is Thomas Durant. He lives in a one-room apartment nearby. The 63 year old retired maintenance worker says he bought the house in 1998 as an investment. He admits the place needed a lot of repairs. But he says the real estate broker promised to fix it up.

DURANT: They said don't worry. If the house need some work we'll take care of it. We'll fix the house up good for you and you won't have to do no work to the house. When you hear something like that you figure it's a good bargain.

Durant had never bought a house before, and says he didn't have a good education. So he made a down payment and signed a mortgage without even hiring a lawyer. The house cost 191 thousand dollars. A big markup considering the broker paid just 78 thousand 500 dollars for it a few months earlier. Durant soon found out he'd been taken.

DURANT: After about a year the house start falling apart. It start leaking in the roof. The bathroom, the water faucet burst loose and whatnot. There was a pipe bust in the basement. Holes was in the house and everything, under the sink rats was coming into the house.

Durant fell ill, and couldn't keep up with the repairs or his mortgage payments. Eventually his tenants left, and squatters moved in. Durant says he changed the locks but the squatters kept breaking in even after he called the police.

The alleged murder that occurred at this abandoned property was an unusually horrific crime. But housing experts say what happened to the building's owner was all too common. Deb Howard is housing director for the Pratt Area Community Council in Brooklyn, a non profit devoted to housing and economic development.

HOWARD: There are a number of buildings that have been, where people have bought that are unsuspecting homeowners that have bought buildings that are in worse condition than they appear. And if they can't rent out the apartment because the conditions are bad, then they end up in a situation where they're in foreclosure. And so the homeowner is evicted subject to foreclosure and you have vacancy.

These scams are exploiting a program intended to encourage home ownership in low-to moderate income, minority neighborhoods. Real estate companies inflate the property value on paper. Then they get the buyer to take out a mortgage for more than the home is worth. Because these loans are insured by the federal government, the lender can make back its money even if the owner defaults.

Last year, the state attorney general went after the company that sold Thomas Durant his house. First Home Brokerage has agreed to compensate hundreds of buyers, in a settlement that admits no wrongdoing. There was also a huge scandal involving a Housing and Urban Development program to renovate run-down buildings. More than 30 people were arrested for defrauding the government. Hundreds of abandoned properties are now being transferred to community groups for redevelopment.

According to housing advocates, more property owners are in danger of losing their homes because of scams like these and the economic downturn. The percentage of New Yorkers falling behind on their federally insured mortgages is now twice the national average. Bedford Stuyvesant is especially hard hit. Boarded up windows are speckled throughout this neighborhood of beautiful small apartment buildings – which are attracting new investors because they're increasingly valuable.

JOHNSON: This is new, this is new.

Edna Johnson points to a brownstone that's been fixed up, near her apartment building on Quincy Street.

JOHNSON: Now look at the building next to it. Nobody lives in there. You see.

Johnson is president of her local community precinct council, and says abandoned homes are a magnet for crime.

JOHNSON: You don't know whether there's squatters or what living in there. You know why, because look. The bottom is all boarded up with metal. But then the top you see some shades. So what does that tell you?

The Bloomberg administration says it's developing more programs to help landlords whose buildings are at risk of abandonment. Jerrilyn Perrine is Commissioner of Housing, Preservation and Development.

PERRINE: Preservation is really our number one priority right now and it has been for awhile because we know that in particular our low income communities can't afford to bear the cost of housing abandonment ever again.

Since 1994, the city has been turning over buildings that were abandoned during the 1970s and 80s to private developers, tenants and community groups. Now that most have been renovated, Perrine says her agency is trying to catch other properties. Warning signs include owners who don't pay their taxes, or buildings with numerous code violations. But Perrine says the city can't spot them all.

PERRINE: I don't think there is a single data base somebody can go to, to find this right now. Our approach is going to be going out into the communities.

She says the city is experimenting with new loan programs, and has also doubled the number of people working on anti-abandonment teams. But housing advocates claim there are still too many troubled properties going unnoticed because the city doesn't make regular inspections and only responds to complaints.

Hardly anyone complained about 731 Greene Avenue. The city only got one call a few years ago about a broken smoke detector. Jeffrey Dunston is president of Northeast Brooklyn Housing Development – a non profit which is renovating a building down the street. He says community groups and the city should work together to help landlords in trouble.

DUNSTON: If that can be done we can then begin to address properties like what we saw on Greene Avenue to either make the owners do what they're supposed to do in terms of selling the buildings out, or maybe it's a way in which to get these owners to come to us and say we need help.

But for that to happen, he says, everyone needs to pay much more attention so abandoned buildings don't go by unnoticed. For WNYC I'm Beth Fertig.

Andrew Sta. Ana and Helen Zelon contributed research assistance to this story.