Signature Bank’s collapse in late 2023 reshaped the lending landscape for owners of New York City rent-regulated apartment buildings. As part of the FDIC’s receivership of Signature, a portion of the bank’s multifamily loan portfolio was transferred to a joint venture in which Santander Bank holds a 20% interest. Since then, some borrowers say the transition has created new operational and financial hurdles.
A Shifting Environment for Rent-Regulated Owners
Before the 2019 rent-regulation overhaul, stabilized-building owners operated in a relatively predictable market. Annual Rent Guidelines Board increases helped offset rising costs, and certain improvements could support modest rent growth. But legislative reforms ended vacancy deregulation and sharply limited renovation-related rent increases. At the same time, insurance, labor, and repair costs have climbed significantly.
Signature had long been known among multifamily borrowers for its familiarity with the rent-regulated market and for loan structures that included features such as unilateral extension options. Owners borrowed from Signature Bank because they assured borrowers that if they run into difficulties they would be there to help, and they were.
After the FDIC transferred a portion of the portfolio to the Santander joint venture, borrowers report a range of new experiences. While Santander bankers make similar statements, those statements seem hollow. Some borrowers report that Santander bankers make on-going requests for information and reports, claiming that they will come back with proposed modifications to help borrowers get through a difficult period, and while the request for data keeps coming, the proposed modifications never materialize.
According to some owners, requests for information or modification discussions have taken longer to resolve, and documentation requirements have increased. Several borrowers also report uncertainty around maturity-date issues, with some saying they were assessed default interest or fees while awaiting decisions. These accounts vary, but many describe a less predictable lender relationship than they experienced prior to Signature’s failure.
These borrowers have suggested that Santander has adopted a policy of saying the right things, but not putting action behind those words, and some borrowers fear that they are being led down a primrose path towards maturity defaults and the charging of fees which enrich Santander at the rent-regulated borrower’s costs, and may result in maturity defaults that cannot be cured.
A New York law firm, Schwartz, Conroy & Hack, PC, is representing certain affected borrowers and is investigating whether a class action lawsuit may be filed on behalf of building owners whose Signature Bank loans were transferred in December 2023.
Owners who believe they have experienced challenges connected to the loan transfer are invited to confidentially share their experiences. There is no cost to inquire and no obligation. Contacting the firm does not create an attorney-client relationship, and no class exists unless and until certified by a court.
To learn more, visit SantanderLoanClaims.com or call 516-745-1122.
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Sponsored by Evan Schwartz, Esq., Schwartz, Conroy & Hack, PC, 666 Old Country Road, Suite 900, Garden City, NY 11530.