The Palazzolo Buildings By JORDAN MOSS and WILLIAM WICHERT
A group of tenants organized by the Northwest Bronx Community and Clergy Coalition picketed in front of a Washington Mutual branch on Fordham Road on Sept. 26. They said they were there to protest that the bank gave Palazzolo more than $65 million in mortgages for at least 60 buildings, despite the fact that those properties have collectively racked up thousands of housing code violations, many of them serious. Tenants want Washington Mutual to conduct inspections of the buildings and to enforce the "good repair clause" of the mortgages, which potentially gives the bank the power to foreclose on neglected buildings. Some of the mortgages were made by Dime, the bank that Washington Mutual acquired in January 2002.
The buildings, scattered all over the Bronx, have succeeded in uniting tenants from Norwood to Highbridge to West Farms. A Palazzolo building in Norwood, 3569 DeKalb Ave., was the site of a disastrous electrical fire in August 2002 that resulted in the death of 8-year-old Jashawn Parker. Tenants had tried for two years in court to get an outside administrator appointed to take over the building, which had more than 300 violations, but the court did not rule in favor of the tenants until two months after the boy's death. Highbridge tenants recently staged a demonstration at 1030 Woodycrest Ave., a Palazzolo building in that neighborhood with 359 housing code violations. Bronx Borough President Adolfo Carrion, who attended the press conference and toured the building, wrote to Washington Mutual CEO Kerry Killinger in an Aug. 22 letter: "I am requesting that, as the financier for this property, Washington Mutual force Mr. Palazzolo to make the needed repairs to the building and maintain it in a lawful manner. The residents deserve no less, and we as fellow human beings cannot in good conscience sit by and allow these conditions to exist. I am sure that your firm does not want to be associated with financing sub-standard housing." Asked to respond to several questions regarding the Palazzolo mortgages and its plans to address the housing code violations in the buildings, Lotus Lu, a Washington Mutual spokeswoman, provided this statement: "We are aware of the issues concerning Mr. Palazzolo and are taking them seriously. We currently are working with him to ensure the matter is resolved satisfactorily. However, because of client confidentiality, we're unable to discuss the specifics of the issues." In an interview for an August article in the Norwood News, Palazzolo said, "I own no buildings. Palazzolo is a lender." But mortgage documents acquired from the New York City Department of Finance (DOF) show that he has signed as the president of the numerous corporations that oversee the buildings. Palazzolo's relationship with Washington Mutual can be seen in two package mortgages that were filed with the DOF within the last year. According to the documents, Dime Savings Bank loaned the Pipe Dreams Realty IV Corp., a member of the Palazzolo Investment Group, $35,820,000 in November 2001 for 35 buildings in Bronx County and two in Manhattan. On the DOF's Web site, the document appeared to have been re- recorded with DOF just two weeks ago, possibly indicating that the mortgage was refinanced. This mortgage includes 1030 Woodycrest Ave., and 3569 DeKalb Ave. The second mortgage, which is dated July 24, 2002, is between Washington Mutual and 33 different corporations within the Palazzolo Investment Group, all of which Palazzolo signs for as either the president or manager of the corporation (see scanned document). The documents show that the group received $32 million for 35 buildings in Bronx County. The same mortgage explicitly identifies Palazzolo as "the president, secretary and sole member of the board of directors of each corporation and the manager of each limited liability company comprising mortgagor." The July 2002 mortgage agreement with Washington Mutual also shows that the Palazzolo Investment Group, as the Mortgagor of the properties, would be in default of its loan if a "prohibited transfer" occurs. In Section 1.18 of the agreement, the document states that the "Mortgagor shall not be managed by any person other than Frank Palazzolo without prior written consent of Mortgagee [the bank]." Despite his clear connections to all the buildings, Palazzolo has managed to steer clear of Housing Court, where the city, as of Aug. 19, was seeking "an Order to Correct all Housing Maintenance Code violations and civil penalties" in at least 37 Palazzolo buildings. Several other individuals associated with various corporations associated with the Palazzolo Investment Group, regularly swear in court that they are the landlords of the buildings, and their names usually appear on the city's Department of Housing Preservation and Development Web site. Tenants, less concerned with the intricacies of bank documents than the conditions in their buildings, say they are going to keep protesting and organizing until they see action. They have been largely unsuccessful in getting the "landlords" (many of them never heard of Palazzolo until they began to organize) to address the conditions in their buildings, so they are now putting the pressure on Washington Mutual. Eddie Molina, who lives in a Leland Avenue building that had a fire over the summer, participated in the picket of the Washington Mutual branch. He said he was there "to force the bank to send inspectors to our buildings."
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Tenants in several severely neglected Bronx buildings owned by Frank Palazzolo are now
pressuring Washington Mutual, the bank that holds the mortgages on more than 60 of the
landlord's properties, to use its power to bring the buildings back up to code.
The conditions in Palazzolo's buildings appear to be in direct violation of the mortgage
agreements' good repair clause. The July 2002 mortgage that covers more than 30
buildings states: "Mortgagor shall, at all times, maintain the Mortgaged Property in good
and efficient operating order and condition and shall promptly make, from time to time,
all necessary or desirable repairs, renewals, replacements, additions and improvements
thereto, whether structural or nonstructural, exterior or interior, ordinary or extraordinary,
foreseen or unforeseen."
