Banks have a stake in city housing stock.

In the 1930s, graphic photos showed bankers foreclosing on family farms and parents with small children evicted along with their few pitiful possessions. The 1990s analog could well be the thousands of low-income New Yorkers now living in deteriorating rental buildings that face foreclosure proceedings.

Our society has come a long way from the days of dust-bowl refugees, factory sit-downs, and bank holidays. Among other improvements, we have the federal Community Reinvestment Act that promotes bank investments in the communities that support them. Isn't it time for financial institutions to go one step further and take responsibility for the housing properties they hold in foreclosure? Instead of just looking to write off the mortgage debt, banks and other lenders - in their own interest as well as the neighborhoods they serve - should try to keep the apartment buildings viable so tenants are not left homeless or in neglected buildings owned by defaulting landlords.

A new study by the Community Service Society of New York, which looks at housing conditions in four low-income neighborhoods, found that a crucial element preventing total deterioration of privately owned multiple dwellings is intervention by a community-based organization, or CBO. Unfortunately, the bank or other lender involved is only concerned with collecting the mortgage payments from defaulting owners. In the study's sample of buildings CBO-assisted, researchers found that the banks' inaction sets up a vicious cycle: no one maintains the apartment building; it deteriorates; the tenants withhold rents; the apartments become uninhabitable; tenants with means abandon the building, often to drug traffickers; there is not enough money to pay the mortgage and everyone loses.

The sad thing is that these low-income apartments are an irreplaceable asset for New York City. Without them, many poor families would be forced into homelessness. This will ultimately result in higher-than-ever costs in terms of human suffering, city funding to manage abandoned buildings, and taxes to pay for the eventual building of replacement housing.

Although the CSS study looks at a sample of 24 buildings, with 600 units, in Brooklyn's Bushwick and Oceanhill-Brownsville, the Bronx's West Tremont and Manhattan's Harlem, the pattern holds true for other low-income, mostly African-American and Latino neighborhoods. An earlier CSS study estimates that 140,000 apartments - one out of six rental properties throughout the city - are at risk of landlord abandonment because of tax arrears or foreclosure proceedings. Both studies were funded by the Rockefeller Fund, which is concerned with preserving the city's affordable private housing stock.

Interestingly enough, in middle- and upper-class neighborhoods, banks often do go beyond merely collecting rent in foreclosed properties. Because they perceive an economic benefit, lenders request the courts to put in place a receiver who collects rents and gets the needed maintenance work done. In housing, as in other areas, because they have little political pull and few resources, poor communities get short-changed. Buildings in these areas, with lower asset values and rent rolls, are also less attractive to receivers.

Lenders can and should play an active role in saving the threatened housing stock and protecting their assets by:

* Collaborating with CBOs to stabilize buildings undergoing foreclosure.

* Including and complying with "good repair" clauses in all mortgages and overseeing their enforcement. This alone could guarantee that small building problems do not escalate.

* Overseeing the management of buildings undergoing foreclosure, ensuring that repairs are made and that money is made available for those repairs.

* Ensuring that defaulted buildings are placed with receivers, that these receivers act responsibly and that they are backed with the capital to maintain the buildings.

The Community Reinvestment Act itself can use some strengthening by making performance during foreclosure a part of the CRA performance rating. Such reform would reward lenders for not only backing initial ventures in low-income areas, but for retaining investments in these areas as well.

Although lenders can play a starring role in this housing drama, they need a team effort to be effective. Community-based organizations are there to actively help tenants improve conditions and remain in their homes by overseeing building management, rent collections and repairs.

In line with the Giuliani administration's support for private initiatives, there are several things the city can do, even with scarce resources, to keep buildings from becoming candidates for city takeover. Some existing, but dormant, programs need to be resurrected.

The 7-A receivership program can rescue buildings in decline from negligent owners. Under its guidelines, a receiver is appointed to rehabilitate a poorly-maintained building. Full funding is needed for such other programs as code-enforcement inspectors, emergency housing repair, and the Community Consultant Contracts, which bank-rolls nearly 100 CBOs, allowing them to organize tenants to prevent evictions and make essential building repairs.

Banks, insurance companies and other lenders, working with the city, local tenant and community groups as well as owners, can go a long way toward preserving this city's housing stock. Stable residential neighborhoods, in turn, stimulate the growth of local businesses, creating a demand for more bank loans and financial services. In a healthy economic setting, everyone wins.