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    Slumlords Stiff Banks—& Rake In Sec. 8 Bucks

    by Neena Satija | Nov 2, 2011 11:08 am

    Poverty landlords Janet Dawson and Michael Steinbach found a way to make money in the recession—stop paying the bank, let properties deteriorate, but continue collecting tens of thousands of dollars a month in checks from New Haven’s housing authority.

    The Housing Authority of New Haven (HANH) is sending Section 8 federal rent subsidy checks to Dawson’s and Steinbach’s various corporate entities for at least 73 rental apartments, according to HANH. That amounted to nearly $80,000 paid out by HANH to the two for the month of October alone.

    Meanwhile, lenders are foreclosing on their homes across town. And even though Dawson and Steinbach stopped paying their mortgages on the properties, that hasn’t stopped New Haven’s housing authority from continuing to send them rent checks.

    Tenants continue to live in some of the buildings being foreclosed on. They pay their portions of rent to the landlords, too.

    And another arm of government, City Hall’s Livable City Initiative (LCI), was chasing after Dawson and Steinbach to make sure their buildings were safe.

    Call it one of the more curious side stories of New Haven’s foreclosure crisis—how problem landlords can get mortgages to fix up houses that remain blighted, stiff their lenders, yet continue to rake in government cash.

    That’s the situation, for instance, at five properties which the Independent visited and examined court and city records about: on Orchard Street in Dwight, Stevens and Redfield Streets in the Hill, Dover Street in Fair Haven, and West Hazel Street in Newhallville.

    The slumlord team emerged in the mid-1990s buying up multifamily houses in New Haven for next to nothing and renting them, in dilapidated conditions, to whoever would live there. They own hundreds of properties.

    Dawson and Steinbach used to operate under the corporate umbrella of now-defunct Apple Management LLC, which painted most of its houses a bright red. The color is now peeling off many of those properties as they’ve transferred title to new corporate entities.

    “They’re literally painting the town red with blight,” says Rafael Ramos, head of code enforcement for LCI. (Click here to read an earlier New Haven Advocate story about Apple’s practices.)

    In some cases, Dawson and Steinbach took out mortgages on the houses for ten or more times their purchase price, and never paid a dime of the loan. When banks issued foreclosure summonses, they stalled the lawsuits for as long as three years and continued to collect rent from unsuspecting tenants the whole time.

    That’s what happened in the case of five houses whose files were examined by the Independent, except that the government was paying most of the rent under the federal Section 8 program.

    Most of the lawsuits are still pending. Landlords have the right to collect until the lender takes over the properties.

    Housing authority Executive Director Karen DuBois-Walton was asked why her agency is keeping the landlords in business.

    “I have a concern about the quality of the house, not the foreclosure status,” said DuBois-Walton (who moonlights as Mayor John DeStefano’s reelection campaign treasurer). “All we would be involved in is making sure that the house is passing code. I just need to know that it’s safe and decent housing.”

    Records show every single one of these five houses has failed multiple Section 8 health and safety inspections.

    “if you’re a landlord, you are obligated to provide safe, decent housing for your tenants and that’s what Section 8 is supposed to confirm,” said Carla Weil, executive director of the Greater New Haven Community Loan Fund. “This is probably less-monitored now than it has been in the past [because of shrinking city coffers].”

    “When people use real estate as their means of making a living, they have a responsibility to do it in a manner that’s responsible to their tenants and that’s not always the case,” Weil said. “If you’re making money, we understand that’s part of the goal. But it shouldn’t be at the expense of your tenants.”

    (Please click link to read full story)

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