The second mortgage crisis has begun.

Same idea as the first crisis – bad bank loans, weak underwriting, and that risky practice of securitized mortgages – except this time it’s hitting large affordable apartment complexes in New York City.

From the Wall Street Journal on Aug. 15 (and also reported in Crain's): “The owners of the 1,230-unit, rent-controlled Riverton Apartments in Manhattan's Harlem neighborhood anticipate defaulting on the property's $225 million mortgage by next month, marking one of the housing bust's largest collapses of a New York City residential development.

“Developers Rockpoint Group LLC and Stellar Management have told the mortgage's servicer that they made minimal progress toward their goal of converting half of the 61-year-old complex's units to market-rate housing since obtaining the mortgage in December 2006 …”

We, housing advocates and elected officials, have been talking about this for a while now. In fact, earlier this month I was out in front of 1520 Sedgwick Avenue – The Birthplace of Hip Hop – urging predatory investor Mark Karasick (and his bank lending cohorts like CIBC) to keep their hands off.

We’ve also gathered over 40 elected signatures in a letter to the State Comptroller, asking him not to invest our pension funds in these real estate deals.

My overriding concern is the tenants: low- and middle-income, hard-working residents who often face harassment every time one of these private equity firms gets its hands on a building. I know people who live at Riverton. They make up the bedrock of the Uptown community. We’re talking about community leaders, business owners and homemakers. Did Stellar expect them all to just leave under their own volition? Did Stellar try to push them out and fail?

But this is not just about a small corner of Harlem or The Bronx. These deals have ripple effects that hurt the overall economy. When the Masters of the Universe and the Smartest Guys in the Room recklessly gamble on our homes, everybody else is left holding the ball.

I can’t help but contrast this with the work we’re doing today in Albany on the State Budget. While I may not agree with everything Governor Paterson wants to cut, I give him a lot of credit for taking proactive steps to avert a financial crisis.

Meanwhile, the Stellars and Mark Karasicks of the world apparently have nothing better to do with their billions than provoke a new financial crisis.

Senator José M. Serrano represents the 28th District, which includes parts of the South Bronx, Highbridge, University Heights, East Harlem, Yorkville, and Roosevelt Island.