%1

Two years after Hahnemann University Hospital went bankrupt, the legal war over proceeds from the eventual sale of the hulking Center City property is heating up, with an early skirmish expected at a Wednesday court hearing, the Philadelphia Inquirer reported. The latest conflict arises from the split of the Hahnemann and St. Christopher’s real estate from the hospitals, which filed for chapter 11 protection starting on June 30, 2019. The real estate was kept out of the bankruptcy. Some saw that split as an insidious move by Joel Freedman, the California businessman who paid $170 million — all of it borrowed — in 2018 for Hahnemann and St. Christopher’s Hospital for Children, to ensure that he would make money no matter what. First, Freedman agreed to court-approved mediation that could lead to some of the money from the sale of real estate going to businesses left with unpaid bills after the bankruptcy. Creditors have filed $8.5 billion in claims in the bankruptcy — though unduplicated claims are likely to be less than $300 million, a filing said. It’s too early to say how much money has been collected to pay those claims. And now, Freedman’s partner and major lender, Harrison Street Real Estate, wants to participate in the talks among the bankrupt business shells, unsecured creditors, and Freedman. Without Harrison Street’s participation, mediation “is doomed to fail” because it would have to approve any agreement, the Chicago real estate investment firm said in a filing. It’s unclear how much the Hahnemann buildings that Freedman owns will sell for because they are in poor condition, making them a costly redevelopment project. Lawyers for the bankrupt shell of Hahnemann have opposed the participation of Harrison Street in talks with Freedman, arguing that Harrison Street’s participation would slow progress, especially given that Harrison Street has refused to provide any documents during the unsecured creditors’ investigation of the original deal. Freedman has said that Harrison Street should participate in the talks. The dispute is scheduled for an online hearing Wednesday before U.S. Bankruptcy Judge Mary F. Walrath in Wilmington.

The Biden administration mounted an aggressive push reshaping national housing policy in a span of 48 hours this past week, replacing a key regulator and pushing a flurry of other changes to try to address growing concerns within and outside the White House about a housing crisis for millions of renters and vulnerable Americans, the Washington Post reported. On Wednesday, the White House named an acting director of the powerful Federal Housing Finance Agency, Sandra L. Thompson, who called out the lack of affordable housing and access to credit for many communities of color. The White House appointed her hours after tossing a Trump appointee. Then on Thursday, the Centers for Disease Control and Prevention extended its eviction moratorium by one month. The Biden administration also announced initiatives to quicken the disbursal of rental relief and encourage local governments and courts to prevent evictions. As part of the effort, the White House will convene a summit this Wednesday for “immediate eviction prevention plans” to prevent an “eviction crisis.” Housing has emerged as one of the most unequal and consequential parts of the economic recovery from the coronavirus pandemic. Low interest rates, cheap mortgages and bidding wars are fueling a housing boom for wealthier Americans and making homeownership out of reach for many first-time buyers. Meanwhile, housing is a top expense and worry for millions of renters and unemployed workers, and advocates fear a wave of homelessness once the CDC’s final moratorium lifts July 31. Though Congress has allocated roughly $46 billion for emergency rental aid through pandemic-era aid packages, much of that money hasn’t reached tenants. On Thursday, the White House and Treasury Department released new guidance to help streamline application processes, calling for an “all hands-on-deck effort,” which is partly why the White House’s housing summit on Wednesday will bring together 50 cities to discuss plans for preventing evictions. The delays in getting relief in the hands of vulnerable tenants is a key reason advocates were clamoring for an extension to the eviction moratorium.

A bankruptcy judge in Manhattan on Thursday ordered real estate attorney Mitchell Kossoff, who is under criminal investigation, to cooperate with the chapter 7 trustee overseeing the liquidation of his law firm, Reuters reported. Within a week, Kossoff and his criminal defense attorney, Walter Mack of Doar Rieck Kaley & Mack, have to meet with chapter 7 trustee Al Togut, who has been seeking everything from bank and credit card records to client lists, Chief U.S. Bankruptcy Judge David Jones ordered. Togut has asserted Kossoff's refusal to provide records has affected his ability to administer the estate of Kossoff PLLC. The meeting between Togut's team of attorneys from his law firm, Togut, Segal & Segal, and Mack should flesh out what documents are available and what documents Mack believes are protected by the 5th Amendment, Judge Jones said.

An upscale retirement community in Port Washington, N.Y., has filed for bankruptcy protection from its creditors for the second time in seven years, records show, Newsday reported. The Amsterdam at Harborside, a nonprofit opened in 2010, stopped making debt payments and refunds of resident entrance fees during the pandemic. As a result, the 329-unit facility is no longer in compliance with state law, according to documents filed last week in U.S. Bankruptcy Court in Central Islip. Amsterdam officials said on Tuesday that "there will be no staff layoffs or reduction or disruption" of services for the 375 people who live at the facility. In the filing, Amsterdam CEO James Davis said that the coronavirus had "exacerbated" the facility's "historic financial challenges" of not being able to attract enough new residents to pay day-to-day bills and the entrance-fee refunds owed to the relatives of deceased residents. The same challenges, along with the 2007-09 recession, led the Amsterdam to file for bankruptcy protection in July 2014, according to Newsday articles from the period. The retirement community, at 300 East Overlook, exited bankruptcy court in early 2015 after restructuring its debt, including tax-exempt bonds issued by the Nassau County Industrial Development Agency. The community also secured $550,000 in IDA property-tax breaks over nine years. That was on top of a 25-year tax deal awarded in 2007, the articles state. "Seven years ago, no one could have anticipated that a global pandemic would hit in 2020 and the effect it would have on our cash flow," Davis said on Tuesday in a statement.

President Joe Biden will move immediately to replace the director of the Federal Housing Finance Agency, Mark Calabria, an appointee of former President Donald Trump with broad powers over mortgage giants Fannie Mae and Freddie Mac, Bloomberg News reported. The U.S. Supreme Court opened the door for Calabria’s removal with a Wednesday ruling that made clear the president had the authority to oust the regulator. A White House official responded by saying Biden would start the process of inserting an FHFA director who supports the administration’s priorities on housing policy. The official asked not to be identified discussing Biden’s intentions. In addition to paving the way for Calabria’s removal, the Supreme Court also dealt a crushing blow to Fannie and Freddie shareholders who are challenging the government’s collection of more than $100 billion of the companies’ profits. The justices rejected claims that the FHFA exceeded its authority under federal law, leaving investors few options to get their hands on funds they’ve been seeking for years. Read more.

In related news, President Biden yesterday designated Sandra L. Thompson as the acting director of the Federal Housing Finance Agency (FHFA) after ousting the agency’s previous chief earlier in the day, The Hill reported. Thompson will lead FHFA, the conservator and overseer of Fannie Mae and Freddie Mac, until a full-time nominee is confirmed by the Senate. Biden has not yet chosen a permanent replacement for Mark Calabria, a Trump appointee who led FHFA since 2019 until he was dismissed by the president Wednesday. Thompson has served as deputy director of FHFA’s Division of Housing Mission and Goals (DHMG) since 2013. She joined FHFA after more than 23 years at the Federal Deposit Insurance Corp. (FDIC). Read more.

Swimming in cash from an unexpected budget surplus and federal stimulus money, California is planning rent forgiveness on a scale never seen before in the United States, the New York Times reported. A $5.2 billion program in final negotiations at the State Legislature would pay 100 percent of unpaid rent that lower-income Californians incurred during the pandemic and would be financed entirely by federal money. The state is also proposing to set aside $2 billion to pay for unpaid water and electricity bills. When California became the first state to shut down its economy last year, Gov. Gavin Newsom predicted dire shortfalls in the state’s budget. But a year later, the state finds itself with so much money that it is poised to not only cover 100 percent of unpaid rent for low-income tenants, but also to give an additional $12 billion back to taxpayers, by sending state stimulus checks of at least $600 to millions of middle-class Californians. The state’s separate rental relief program would be available to residents who earn no more than 80 percent of the median income in their area and who can show pandemic-related financial hardship. In San Francisco, a family of four would have to earn less than $146,350 to qualify. California is not the only state flush with money. At least 22 states that had unused pandemic relief money and that had trimmed their budgets anticipating fiscal challenges have now found themselves with a surprising surplus in revenue. Idaho is on track for a record-breaking $800 million surplus at the end of this month, while others like Oklahoma, Utah and Washington reported similar budget increases. And while some states haven’t yet decided how to spend the money, others are funneling the cash into education, construction and reviving local arts.

U.S. home prices in May experienced their biggest annual increase in more than two decades, as a shortage of properties and low borrowing rates fueled demand, the Wall Street Journal reported. The median existing-home sales price in May topped $350,000 for the first time, the National Association of Realtors said Tuesday. The figure was nearly 24% higher than a year ago, the biggest year-over-year price increase NAR has recorded in data going back to 1999. Sales prices have been climbing sharply since last summer, when lockdowns related to the COVID-19 pandemic eased across the country and many people rushed to find more space and bigger homes. Others working remotely seized on the chance to move to a less expensive city. The price increase is contributing to a slowdown in the pace of home sales. Existing-home sales fell 0.9% in May from April, marking the fourth straight month of declining sales, NAR said. Sales are also slipping because there aren’t enough homes on the market to meet demand, say economists and real-estate agents. Homes that are for sale are moving quickly. The typical home that sold in May spent 17 days on the market, matching the record low reached in April, NAR said. Buyers with limited cash for down payments are struggling the most to compete. Just over half of existing-home buyers in May who used mortgages put at least 20% down, according to a NAR survey.