This report evaluates New York City's methods of managing, upgrading and disposing of the housing it takes for tax arrears. Seven major policy recommendations are offered for handling these in rem properties. The first recommendation suggests that the city develop early intervention strategies in order to stem the flow of distressed properties into the in rem process, and that money be made available to increase the capacity of local groups to take over in rem buildings. Second, timely vesting must proceed in accordance with the provisions of Public Law 45. Third, in rem housing should be made viable by upgrading uniform standards of liviability. Fourth, in rem housing should be weatherized, using Federal and private funds. Fifth, rehabilitation programs must be made responsive to in rem housing problems; in addition, Federal housing policy should become oriented toward rehabilitation and New York State should undertake financing the improvement of distressed housing. Sixth, sales of in rem properties to tenant, community and other nonprofit groups should proceed expeditiously. And seventh, housing and community development programs should include opportunities for economic development and jobs for local residents. (Author/APM)