Neighborhood Activists Protest Investment Firm That Buys Foreclosuress

A peaceful workday turned into an echoing protest against Lone Star Funds on Thursday.

“Lone Star, Lone Star, you’re no good, stop selling our neighborhood,” some 70 people from the Communities for Change group chanted in the lobby of Lone Star Funds office at 888 7th Avenue in Manhattan.The protestors charge that the company uses unfair tactics to buy properties facing foreclosure in poor neighborhoods.

Lone Star Funds is an investment firm that builds its portfolio primarily by buying properties in danger of foreclosure at a 30 percent discount because of a deal with the federal government, and then sell them at a profit.

In Crown Heights, for example, the activists accused the fund of buying out rent-controlled buildings and reselling them to slumlords. Once they acquire the building, the demonstrators add, they do anything they can to get the tenants out. They harass the tenants and threaten eviction and refuse to make repairs. To those that refuse to leave, they promise to fix up their apartment just to get them out and then never let them back in, sometimes even by force.

“The tenants have rights to come back to their apartment but they don’t know of them,” said Esteban Giron, who has lived in Crown Heights for three years. “The ones that do take legal action run into trouble when a building gets sold four times in one year and the judge can’t do anything to the new management.”

The actions of such equity funds contributed to the housing crash of 2008, according to economists. The government is powerless to do anything once the building are in private hands and if something goes wrong, it is those private ownership groups that are responsible.

Lone Star is the nation’s biggest buyer of distressed homes. The government gives them tax breaks of $70 million instead of using that money to improve the rent stabilized housing.

On September 30, Senator Elizabeth Warren and many other politicians and hundreds of homeowners, held a rally in Washington DC to protest HUD and FHFA’s sell-offs of homes and neighborhoods to Wall Street.

The protest on Thursday ended when police were called in to clear the lobby after 20 minutes.

“You could tell from the reaction of the people in the building that we accomplished what we wanted,” said Renata Pumarol, spokeswoman for New York Communities for Change. “The goal is to get the federal government to stop selling them mortgages.”

Lone Star Funds refused to comment.