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Congress Must Protect Tenant Rent Provisions in Any Wall Street Mortgage Bail-Out, AIDS Activists Say
Gay Men's Health Crisis warns against mistakes made during S&L bailout that led to evictions of rent-stabilized tenants
New York City — Congress must act now to protect apartment dwellers from any lease repudiation powers proposed as part of the $700 billion financial bail-out currently being considered, GMHC warned today. Such broad anti-tenant powers were granted to the federal government in the savings and loan bail-out 19 years ago, overriding state and local rent regulation, and leaving residential tenants in buildings taken over by the government subject to termination of their leases and eviction from their homes.
"We urge our elected officials to protect the interests of low and moderate income residential tenants, including the many people living with HIV/AIDS," said Marjorie Hill, Ph.D., Chief Executive Officer of Gay Men's Health Crisis. "The housing crisis in New York and around the country is bad enough already. We must not displace innocent residential tenants who played no role in creating the problem."
The Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA) was enacted by Congress in response to the savings and loan crisis of the 1980s. It created the Resolution Trust Corporation (RTC), a U.S. government-owned company with the responsibility of closing hundreds of insolvent thrifts, liquidating their assets (primarily real estate related assets, including mortgage loans), and providing funds pay-out insurance to their depositors. Between 1989 and mid-1995, the Resolution Trust Corporation closed or otherwise resolved 747 thrifts with total assets of $394 billion.
The RTC, in its capacity as a receiver of failed savings and loan associations, was granted extraordinarily broad powers to repudiate any contract or lease encumbering a property under its control which it found burdensome.
In Resolution Trust Corporation v. Diamond, 45 F3d 665 (1995), the United States Court of Appeals, Second Circuit, held that under FIRREA, leases for both rent controlled and rent stabilized apartments are "fully subject to the RTC's repudiation power," that to the extent the anti-eviction provisions of New York's rent regulations interfere with the operation of the act, "the state regulations and laws are preempted by FIRREA," and that eviction could occur at the end of each lease holder's tenancy, such term expiring "one year from the date the tenant was served with notice of the RTC's election to repudiate the lease."
GMHC is sending letters to the New York Congressional delegation and the leaders of the House and Senate Financial Services Committee raising these concerns.
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Gay Men's Health Crisis (GMHC) is a not-for-profit, volunteer-supported and community-based organization committed to national leadership in the fight against AIDS. We provide prevention and care services to more than 15,000 men, women and families that are living with, or affected by, HIV/AIDS in New York City, and advocate for scientific, evidence-based public health solutions for hundreds of thousands worldwide.
Our Mission: GMHC fights to end the AIDS epidemic and uplift the lives of all affected.
© 2008 Gay Men's Health Crisis
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