The Tenant Activism Behind Signature Bank’s New Lending Policies

Last week, Signature Bank released a strong set of multifamily lending best practices, setting a high standard of commitment to ensure that their mortgage lending does not contribute to the harassment or displacement of tenants. The new policies came about in response to the Association for Neighborhood & Housing Development (ANHD) members working with tenants of bad-acting landlords, some of whom received financing by Signature Bank. Over the past two years, tenants organized together across the city and brought their concerns and policy recommendations directly to the Signature Bank leadership. Their powerful collective actions built tenant power, held the bank accountable, and lead to tenants and the bank’s board of directors and senior staff coming together to create a set of best practices to combat harassment and displacement.

A recent New York Times article, which focused on Signature’s dealings with Jared Kushner and others connected to the Trump administration, referenced ANHD’s announcement of Signature’s multifamily lending practices. While Kushner certainly has a history of alleged tenant harassment and displacement, he is far from alone in that practice. The best practices Signature Bank adopted should send a strong message to all landlords of rent-regulated housing: tenant harassment and displacement will not be tolerated. We believe that all multifamily lenders should adopt similar policies, which are modeled on ANHD’s set of best practices.

An essential part of the story here is the tenants who made this happen. Tenants directly impacted by banks making loans to bad-acting landlords stepped up to demand changes. The Toledano tenants offer one strong example of why these practices matter, as they suffered almost immediately after Raphael Toledano bought their buildings with financing from Signature Bank and Madison Realty Capital. The Toledano tenants and allies took to the streets in December 2016 and met with senior leadership soon after to discuss their concerns and the set of best practices.

Tenants across the city organized and worked together to urge the bank to adopt these practices. Tenants came from buildings owned by multiple landlords with a history of high violation counts, alleged harassment, and poor treatment of tenants. They rallied, delivered letters to the bank and regulators, and met directly and communicated with the Bank’s Board of Directors and senior management over the course of nearly two years. They showed up at two annual shareholder meetings to make their voices heard by the Bank and its shareholders. At the first shareholder meeting, tenants rallied outside and delivered a letter to Signature Bank’s Board of Directors documenting their issues and the practices they wanted the bank to adopt. At the second shareholder meeting, tenants went inside to give personal testimony, while others marched outside.

The bank heard the message and responded. Senior Signature Bank management sat down with ANHD, our members, and tenants to negotiate a pledge that addressed our concerns, and should serve as a model for more banks.

Citywide, community groups and elected officials are increasingly concerned that tenants in neighborhoods across New York City are under growing threat of displacement as the ever-rising real-estate market creates a greater incentive for tenants paying affordable rents to be pushed out. ANHD member groups have been working with tenants of bad-acting landlords for some time. These landlords rely on financing from bank- and non-bank lenders, and it is clear that lending underwriting standards play an important role to either encourage or discourage tenant displacement and other bad practices. Banks are increasingly aware of how important responsible lending is to support decent, stable neighborhoods, and we praise Signature Bank for their willingness to institutionalize tenants’ concerns and for their commitment to an industry-leading set of best practices.

Signature joins New York Community Bank, which signed on to a similar set of best practices two years ago. These are two of the largest multifamily lenders in the city and their practices have the potential to impact tens of thousands of tenants citywide and set an important standard that other lenders should follow. Signature’s new pledge includes all three elements of ANHD’s set of best practices:

• Responsible underwriting based on current rents and realistic maintenance costs;
• Appropriate vetting of borrowers to avoid lending to known bad actors; and
• A commitment to respond to issues in buildings when problems arise.

Signature Bank is also hiring a Community Liaison who will work directly with tenants and tenant organizers to visit buildings and help resolve issues. This person will also help carry out other aspects of the pledge, along with senior lending and credit staff.

Banks are regulated under the Community Reinvestment Act (CRA), and under the CRA, banks have an obligation to truly meet the credit needs of the community with their lending. Lending that leads to harassment, displacement, poor conditions, and a loss of affordable housing, runs counter to that obligation.

Some of the community groups who made this possible include Cooper Square Committee, Housing Conservation Coordinators, Northwest Bronx Community & Clergy Coalition, New Settlement Apartments/CASA, Chhaya Community Development, St. Nick’s Alliance, and the Community Development Project at the Urban Justice Center. ANHD looks forward to working with Signature Bank to successfully implement this agreement and continue to set a high standard for the industry, and we believe that all multifamily lenders should adopt similar practices.