MICHELE NORRIS, host:

From NPR News, it's ALL THINGS CONSIDERED. I'm Michele Norris.

When we talk about the foreclosure crisis, we often describe vast neighborhoods of empty homes spread across suburbs in Florida or California or other locales. But the collapse of the real estate market has also been hard on renters, especially in major cities.

NPR's Jim Zarroli takes us now to New York, where some of the city's biggest apartment complexes are at risk of foreclosure and where others have been abandoned altogether.

JIM ZARROLI: Luis Correa stands in the musty back bedroom of his apartment on University Avenue in the Bronx, as his cousin, Miriam Maldonado, who lives downstairs, watches, he points to the ceiling and talks about what happened last winter.

Mr. LUIS CORREA: For two weeks we had no heat. This room right here, it had icicles coming from the ceiling. That's how cold it was in here.

ZARROLI: Why did the heat go off?

Ms. MIRIAM MALDONADO: No oil.

Mr. CORREA: Nobody have no oil and they weren't going to pay for oil, so they just left us like that with no heat for those two weeks suffering here in the cold.

ZARROLI: As Correa speaks, neighbors come in to talk about the building. There are leaks, faucets that won't shut off, rooms with no electricity and a broken front door that allows strangers to wander the hallways at will. Correa says the building wasn't always like this.

Mr. CORREA: I grew up here. I was born here. And as soon as these people took over, you know, the building just went downhill from there.

ZARROLI: The building was bought by Ocelot Capital Group in 2007. At the time, the real estate market was booming. Marginal neighborhoods like this one were getting gentrified, and the city was phasing out its rent control laws, making apartments like this much more profitable. Ocelot purchased 19 buildings for the staggering sum of $36 million.

Kerri White is with the Urban Homesteading Assistance Board, a housing advocacy group.

Ms. KERRI WHITE (Homesteading Assistance Board): They sold them all to this one big private equity company, and they paid a lot of money for them. They paid much more money than they were worth and so the debt on the buildings became unsupportable.

ZARROLI: Ultimately, Ocelot defaulted on its loan and abandoned the buildings. By one estimate, 70 to 100,000 apartment units in New York are in foreclosure or at risk of it.

Emily Youssouf, former head of the city's Housing Development Corporation, says that's left a lot of renters in limbo.

Ms. EMILY YOUSSOUF (Former President, New York City Housing Development Corporation): The tenants, who will be hurt if these things continue, are the only people in this whole mess who never borrowed any money, who never put their name on something. They're not subprime borrowers. They're tenants who pay their rent and who just expect a clean decent place to live in return.

ZARROLI: Youssouf says properties at risk include small buildings like this one, but also sprawling complexes like Peter Cooper Village and Stuyvesant Town in Manhattan, which together have 110 buildings. They were sold to private equity firms in 2006 for $5.4 billion in what was called the biggest real estate deal in U.S. history. In most of these cases, developers took out huge loans based on wildly unrealistic rent projections and couldn't pay them off when the market collapsed.

Youssouf says some buildings like this one in the Bronx, had been abandoned altogether.

Ms. YOUSSOUF: This is one that's further down the road as far as some deterioration, which you can see. Some of the other ones - hasn't happened yet. But unless their debt is somehow fixed, unless the lenders who are involved with those buildings really deal with the problem, it's going to get worse.

ZARROLI: Youssouf was hired by the Rockefeller Foundation to help lenders find ways to restructure their debt. But she says banks are often reluctant to do this because it means taking a hit on their books. Instead, they'll look for a new developer willing to take a chance on a building by assuming the mortgage. The problem is the new owners often can't make the loans work either. Meanwhile, time is running out.

Economist Sam Chandan worries about what will happen if a big complex like Stuyvesant Town defaults. He says it would reverse some of the efforts by the Fed and the Treasury Department to prop up the real estate market.

Mr. SAM CHANDAN (Economist): There's a chilling effect that that potentially has in terms of the broader market's perception of what's going on in commercial real estate. One of these large defaults that inevitably will make the cover of the paper, you know, might offset some of those efforts that have been made.

ZARROLI: The challenge, he says, is to convince lenders to cut their losses and write off their bad loans before that kind of default can happen.

Jim Zarroli, NPR News, New York.

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