Jessy Edwards  |  July 16, 2021

Category: Discrimination

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foreclosure in New York City
(Photo Credit: Allison Peltzman/Shutterstock)

The City of New York illegally foreclosed hundreds of homeowners’ properties in a program that predominantly targeted communities of color, a class action lawsuit alleges.

On June 23, a 2nd Circuit Court of Appeals judge ruled that the NYC foreclosure class action lawsuit against the City of New York and two development companies could go ahead, according to court filings. The decision was a win for plaintiffs whose claims were previously dismissed in a lower court. 

The New York foreclosure class action was first filed in 2019, and is led by three New Yorkers of color who lost their properties to the City’s Third Party Transfer Program (TPT). 

The plaintiffs allege the city violated homeowners’ federal right to due process when it took away their homes under TPT. 

The TPT is an affordable housing program launched in 1996 to foreclose derelict housing units with overdue property taxes, fix them up and rent them out to low-income tenants.

However, the program has been criticized for targeting communities of color and for foreclosing on properties that were not distressed, but simply owing property taxes worth a fraction of the homes’ values.

Plaintiff McConnell Dorce, a Haitian immigrant and retired ambulance driver, says his Brooklyn building was taken by the city and given to a developer in 2015, according to the NYC foreclosure class action lawsuit. 

He says his building was entered into the program because he had a $15,000 water bill, which he had an arrangement to pay off. Despite this, Dorce alleges he was never told his property title was being taken from him, or given a chance to remedy the situation. 

It is now estimated his former property would be worth about $1 million today, according to a property valuation website

Another plaintiff, Sherlivia Thomas-Murchison, owned shares in a Brooklyn property. She alleges in the New York foreclosure lawsuit that she was left homeless with two children after her property shares were taken from her without any reimbursement.

“We have definitely been cheated and targeted through this program,” she said in a press release.  

“My now deceased mother worked, for close to 25 years, to ensure that our family would have long-term residency in an already-existing affordable housing co-op. The City took that away with the stroke of a pen.”

The plaintiffs are seeking to represent at least 700 other former-homeowners who had their properties unfairly taken under the program. They are seeking damages, and to recoup the equity they once had in their properties.

Lawyers for the plaintiffs estimate damages could reach into the billions of dollars, the BK Reader reports.

Since the lawsuit was filed in 2019, the program has been put on hold as it undergoes an investigation.

Class action lawsuits around foreclosure can sometimes end in million-dollar settlements. 

In October last year, a judge granted final approval on an $18.5 million settlement benefiting some Wells Fargo home loan customers. The settlement ended a class action lawsuit alleging bank errors led to mortgage holders losing their homes to foreclosure.

Foreclosure has been an ongoing topic of late also due to the impact of the coronavirus pandemic

What do you think of the allegations against the City of New York in this case? Let us know in the comments!


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