New York Community Bank's lending practices condemned

A New York City housing advocacy group has condemned the largest Long Island-based bank for funding and enabling slumlords, but shocked bank officials said the criticism represents a stark misunderstanding of how it operates.

The criticism of Westbury-based New York Community Bank from the Association for Neighborhood and Housing Development came in the group's second annual review of banking reinvestment in the city, released this week. Generally, the group was disappointed by the level of support for development in the city's lower-income neighborhoods, but singled out New York Community Bank.

"New York Community Bank's multifamily lending has endangered affordable housing throughout the city by providing the city's most notorious slumlords with unlimited financing," the group's report said. "Furthermore, the bank has been completely unresponsive to requests for meetings and information. In fact, [we have] . . . found New York Community Bank to be in a league of its own in terms of its lack of accountability to the communities in which it does business or indifference to public criticism."

Dave Hanzel, the group's deputy director, said the bank has a history of driving already run-down buildings into further financial trouble.

"For a couple of years now, New York Community Bank has been on our radar screen as a destructive institution" for lending to predatory owners, Hanzel said. "They have been complicit in overleveraging these properties."

James Carpenter, the bank's chief lending officer, vigorously objected to that Friday.

"It's absolutely a mischaracterization of our lending philosophy," he said. It would make no sense for the bank to lend money to a landlord who can't pay it back, he added.

In its most recent earnings release, the bank, which specializes in lending to owners of rent-controlled apartment buildings, reported writing off $10 million in loans - 0.04 percent of its total - as uncollectable. That is considerably lower than the industry average.

Carpenter said the bank's practice is to make loans based on a building's current cash flow, rather than projections. That ensures that a building doesn't get overleveraged, he said.

The bank's loans can lead to increased rents because they finance building improvements, but Carpenter said the bank is not an agent of gentrification.

The bank has two officers whose job is to be responsive to community groups, but neither they nor he recall ever hearing from Hanzel's group.

"I may have missed a call," Carpenter said. "But I didn't miss five calls."