(New York, NY) Thousands of yellow cab medallion owner-drivers will finally begin to see the debt relief they won after NYTWA members held a 45-day camp out and 15-day hunger strike last November, as City Hall announced today that the program to provide a city-backed guarantee on restructured loans will be operational starting September 19th.
Under the program, loans that are reduced by medallion lenders to no more than $200,000 will receive a $30,000 grant and the remaining balance will be guaranteed by the city in case of default.
The average debt is currently $550,000 with average monthly payments at $3,000. Under the final program, the new loan term for thousands will be $170,000 payable at $1,234 per month.
The final program reflects an increase in interest agreed upon in November 2021 from 5% to 7.3% as rates have gone up due to inflation; and a longer term of 25 years from 20 years to help drivers offset some of that cost.
The loan will be secured by a city-backed guarantee, relieving thousands of drivers from the fear of losing their homes or thousands of dollars in case of default.
Marblegate Assets, the largest holder of loans, is ready to begin restructurings on September 19th – bringing immediate relief to the largest segment of owner-driver borrowers.
The City’s program is for all lenders and all eligible medallion owners (medallion owners who do not own more than 5 medallions.) Other lenders representing hundreds more loans are expected to also participate.
NYTWA Executive Director Bhairavi Desai said: “We are finally at the starting line of a new life for thousands of drivers and our families. The city-backed guarantee is a ground-breaking program that will save and change lives. We are thankful to City Hall, the TLC, the Mayor’s Office of Management and Budget, the Law Department, and to Marblegate for burning the midnight oil to set up this historic program to address the crisis of debt across the industry. As we collectively work to end this crisis and hit re-start, we look forward to working with all lenders. I congratulate all of our union members who chose to organize, and not despair, and won back their lives. Against the darkness of a crushing debt, their courage remained the light, and today, the triumph is fully theirs.”
Since City Hall agreed to a city-backed guarantee in November 2021, the Adams administration’s TLC, Office of Management and Budget and Law Department have been working to make the program operational. The City negotiated program terms and documents with Marblegate Assets, the largest medallion loan holder, and NYTWA.
NYTWA members voted unanimously to give their sign-off at the end of negotiations.
The new terms for drivers means:
- No personal guarantee in case of default
- No Confession of Judgment; COJ are pre-signed documents by the borrower accepting responsibility in case of default and waving their right to a hearing. Lenders would be empowered to skip the court process including a trial to receive a judgment that could then be collected on immediately; including going after people’s homes as the COJ would be combined with a personal guarantee.
- No balloon payments; Balloon payments meant that the lender could demand the full balance on a loan at the end of a balloon which would typically be every 3 or 5 years. Owner-drivers would be forced to agree to any new terms, including high interest rates, the lender would demand at the end of the balloon.
- No pre-payment penalty in case a borrower wants to pay off the loan earlier
Click here to see our statement on November 3, 2021 when the agreement was first reached