Years ago, in the case of the fraudulent sale of apartment building located at 345 Ovington Avenue in the Bay Ridge area of Brooklyn, over twenty Chinese families faced the threat of eviction. Now, after years of efforts from various sectors, the saga has finally come to a fulfilling conclusion.
On June 26, Asian Americans for Equality (AAFE), New York State Attorney General Letitia James, and other government agencies announced that residents have been relieved of the specter of being thrown out of their homes and are now on the path to becoming homeowners. This achievement was made possible through the collaboration of a large team.
In 2012, developer Wu Xihui constructed a 5-story residential building at 345 Ovington Avenue, offering 25 condominium units. Wu claimed that if property transfers were not completed by the end of 2013, he would refund the down payments plus 5% interest. However, many of the buyers were Chinese and unfamiliar with American legal procedures, leading them to make cash payments for homes based solely on Chinese agreements.
The apartments quickly sold out, with buyers mainly coming from Fujian and Guangdong provinces. Most of them purchased through friend referrals without hiring lawyers to review contracts. Some families pooled together up to $500,000 as down payments, contributing over $5 million collectively.
Resident Lin Zhangjiang, who lived on the first floor, stated that he had known Wu Xihui since 2005 and trusted that a wealthy family like Wu’s would not deceive them. Thus, many signed Chinese agreements and paid for what they believed to be “their own apartments.”
29-year-old Kris Chan recalled moving in with her family over a decade ago. Her mother had chosen the apartment seeking a safe haven in a good neighborhood. “The area is safe, the price was within our budget, and it was a new building, so we purchased it,” she said.
Although the apartments were occupied since 2015, Wu Xihui did not have official approval for the sales plan in New York State. He lacked the authority to sell these residential units, leaving the property deeds of over twenty households pending.
According to the New York State Office of the Attorney General (OAG), Wu Xihui pocketed tenants’ payments for construction and repaying the building’s loans, but due to incomplete paperwork, the New York City Department of Finance never subdivided the building into individual tax lots, preventing the creation of separate deeds. OAG was also unable to approve the developer’s splitting of the apartment building into distinct units for sale to individual occupants. Hence, despite residents paying Wu for their purchases, they were considered illegal occupants under the law.
In October 2018, mortgage lenders initiated foreclosure proceedings on the building, citing Wu Xihui’s borrowing of $5.85 million starting in 2015 and halting loan repayments since 2017, with interest rates climbing to 24%. Subsequently, Wu Xihui’s creditors began seizure proceedings, putting the tenants at risk of losing both their money and homes.
Starting in December 2018, one buyer began suing Wu Xihui, with the remaining twenty-plus buyers following suit in the first half of 2019. However, Wu Xihui disappeared, with some saying he fled back to China while others claimed he was hiding somewhere in the United States. In February 2022, the mortgage lenders successfully foreclosed on Wu Xihui and were preparing for an auction on July 28 of the same year.
Kris Chan revealed that they only discovered the building’s financial issues upon receiving court summonses around 2018, feeling shocked, helpless, and under tremendous pressure. “Around 2018, we received documents from the bank, and that’s when we found out about the financial problems with the building.”
As one of the few tenants fluent in English, Kris Chan took on a leadership role. She said, “After identifying the issues, we sought out lawyers, but faced many difficulties along the way. Several lawyers either declined or did poorly until we found the current lead counsel, Attorney Edward Cuccia, as the collective litigation representative. He listened attentively to our case, guided us with his experience, spent extensive time communicating with relevant parties, and gradually resolved the issues.”
However, due to the pandemic, legal proceedings were time-consuming, with mortgage accruing interest and penalties. In May 2022, residents won a judgment, with the New York Civil Court ordering Wu Xihui to reimburse them for the home purchase payments, albeit unable to halt the auction.
To avoid immediate foreclosure, some residents submitted legal documents, forcing the property into bankruptcy proceedings. Once Chapter 7 bankruptcy proceedings commenced, the court assumed control as the bankruptcy estate trustee, selling off non-exempt property of the debtor to pay off creditors. This presented an opportunity to negotiate with Wu’s creditors. On July 27, the day before the auction, the Brooklyn Civil Court temporarily halted the foreclosure. OAG subsequently filed a separate lawsuit against Wu Xihui, with the case still ongoing.
By the end of 2022, AAFE intervened with the New York State Homes and Community Renewal (HCR), OAG, and elected officials. AAFE Executive Director Thomas Yu recalled that these agencies and elected officials approached him, stating that residents had exhausted all avenues, but the court could continue canceling their foreclosure rights, leaving them homeless as they were not legitimate homeowners.
Though inexperienced in handling such complex cases, Yu decided to investigate and assist the resilient residents. With the help of lead counsel Cuccia and court-appointed officials, AAFE staff began meeting with families and engaging with the New York Attorney General and State housing agencies, devising a resolution. “Many ask about our chances of success. I cannot give a definitive answer, but we are committed to giving our all,” Yu stated.
After months of discussions and negotiations, AAFE devised a plan to purchase mortgage notes, preventing foreclosure, and commenced converting the building into a limited equity cooperative. The entire project was estimated to cost over $15 million, covering the acquisition of the property and renovation of the 25 unit building. Financial assistance and support were provided by HCR, HPD, and allocations of $1.5 million from the FY24 capital budget by New York City Council Speaker and City Council Member.
Senator Yu Jiwon of New York State allocated $400,000 to AAFE. Reflecting on the intervention, Yu Jiwon stated that two years prior, she attended a press conference and had been following the case’s progress ever since, reaching out to AAFE in the buyer search process. “Aside from financial support, language and cultural understanding are critical within the Chinese community. If residents cannot communicate smoothly with prospective cooperative units, more issues might arise, leaving them clueless about becoming legal homeowners through proper procedures,” she noted. Being located just a street away from her district, she deeply understood the struggles of Chinese immigrants, emphasizing the significant shock when they discovered their life savings had been swindled.
In May of this year, AAFE, in collaboration with city and state officials and agencies, purchased the building. “The entire process was incredibly intricate, but we have secured a phase of victory,” Yu stated. They first risked investing $1 million from funds earmarked for other projects, believing the effort was worthwhile. Although the government would reimburse the remaining amount, it would take a long time. Thus, they secured bridge financing from another lender before the state and city governments chipped in to help legitimize the building into a cooperative. It was estimated that after a year, they would hand over the keys to residents, turning them into legal homeowners.
New York State Homes and Community Renewal (HCR), New York State Attorney General Letitia James, New York City Department of Housing Preservation and Development (HPD), along with City Council Member and State Senator Yu Jiwon, played pivotal roles in stabilizing 345 Ovington Avenue, assisting AAFE in constructing a successful rescue strategy, averting bankruptcy and foreclosure. Enterprise Community Partners provided a loan through the New York Acquisition Fund managed by Kosciuszko Street Consultants.
The building comprises 25 units, with five vacant apartments to be sold at below-market rates to ensure affordability. The existing 20 tenants will have ownership of their respective apartments, paying for building maintenance, taxes, and water.
Kris Chan expressed that the entire process was arduous, with many doubting the possibility of resolving the issue in New York. “But our lawyer tirelessly contacted relevant parties, made phone calls, sent emails, and through his abilities, the power of the media, and the assistance of government officials, turned the impossible into the possible.”
Resident Rei Tan reflected, “This apartment was initially prepared for my parents’ retirement. Now, I am at peace knowing my mother is safe in her own home.”
“Two years ago, to keep these families in their homes seemed to require a miracle,” Yu summarized. “Many partners worked together, addressing a series of intricate legal and financial issues, turning this disaster into a success story. We are pleased for these families as they move closer to achieving the American dream of homeownership.”