DC Groups Victorious in Saving Cooperative from HUD Foreclosure
From the Field
Memo to Members: Vol 12, No. 25, June 22, 2007
Earlier this month, NLIHC's District of Columbia partner, Advocates for Building Assets and Affordable Housing (ABAAH), helped halt the foreclosure and auction of Sayles Place, a 61-unit, low income housing cooperative financed with a HUD-backed mortgage. Although the cooperative never missed paying a bill throughout the years and was current with mortgage payments, HUD moved to foreclose on the housing cooperative and sell the property in an auction sale on June 15, citing technical defaults in a contested inspection process. In addition, HUD rejected an offer by the housing cooperative last year to pre-pay the balance of its mortgage seven years early to secure financing for renovations. The attempted HUD foreclosure and auction was challenged and halted by ABAAH, residents, and community leaders, successfully preserving the Southeast DC property as an affordable housing cooperative for low income residents.
Sayles Place was built in 1970 and converted to a cooperative in 1973. Residents paid a $2,500 fee to buy into the cooperative and pay rents of $1,000 or less a month depending on income.
The cooperative first learned of foreclosure notices when it changed housing management companies in 2000, and the new company informed the cooperative of the notices. Sayles Place residents did not receive the required HUD training or oversight for low income housing cooperatives, nor were they informed that their original management company lacked HUD certification. In reaction to foreclosure notices, and on the advice of HUD, the cooperative hired a consultant in 2003 to make plans to finance repairs, find a developer and pre-purchase their homes. The battle reached a new urgency when these plans and the offer of pre-purchase were rejected by HUD without reason. Then, HUD claimed the cooperative was in technical default because it needed repairs and failed Real Estate Assessment Center (REAC) inspections, even though residents used reserves to make repairs.
"HUD said that they had done eight inspections, but the cooperative residents say they never had more than two inspections," said Ryan Juskus, advocacy coordinator for ABAAH. "HUD also claimed that they failed REAC inspections, but it was by a point or two, and for random citations like doors and windows that don't open in unused areas of the building."
After a prolonged effort spanning several years, the cooperative's first victory in the foreclosure battle was to secure a three-week postponement of the original May 25 auction sale, setting June 15 as the new date. Then, on June 12, just three days before the auction, HUD finally cancelled the foreclosure and auction sale altogether. As a result, cooperative residents of Sayles Place will be able to realize their dream of long-term, affordable housing for low income people, and homeownership for many by 2014.
"First the auction was postponed and then public outcry increased, so HUD needed a way out," Juskus said. "We sent a lot of letters, and NLIHC and folks from around the country sent letters, and last week we got a letter from HUD saying that they cancelled the auction."
ABAAH's mission is to join with others from within and outside the District of Columbia to create a constituency of concerned neighbors and friends who will act as a powerful voice to influence public policy and resource allocation for affordable housing and asset building in the District.
For more information: Ryan Juskus, ABAAH, 202-832-1845, info@ahadc.net.
