Sunday, June 8, 2008

Dark Humor On The MLS Listings (415 31st Ave. N.)

Fair comment and criticism

This property is the one involved in the lawsuit between CitiMortage and the Hawthorne Area Community Council...

I'm very surprised to see it listed on the MLS, but I figure it's part of the legal maneuvering and the seller is trying to make the record, somehow, about what the property is supposedly worth. Tonight I see the price is $18,500. Ridiculous. There are houses in much better shape going for less.

Once again, we see the delightful "truth in housing" tendency with the MLS photo, if you're familiar with the property and know what you're actually seeing. For example, the door is kicked open. It's not open because the agent was there, checking the place out. No, somebody took a chain saw and cut off the board...then the front door was kicked in.

That was the situation before I boarded it up. Note the tracks to the door. Very likely these were made by Khameron NMN Lake and his prostitute, Kathy, who were well known for hanging out in that vacant property as well as other vacant properties in the area.

The listing says the property was built in 1888. It also says "Beware of mold present." Uh huh. That might have something to do with broken windows on the second story being left open to the weather for, well, certainly as long as half a year, but probably more.

"Property is a fixer upper. Needs many updates, TLC, and cosmetic rehab. Sold as is." To that I would add: buyer must provide own matches and/or backhoe.

No, I have to admit...I'd live in this place. But only in a backwater rural environment where "housing codes are for city slickers." (Most of the State of North Dakota, for example, and I know whereof I write)

The legal description is noted as "lengthy." That's an understatement. This house has become the symbol of how predatory lending has messed over the Hawthorne neighborhood. To "lengthy" add "colorful, sordid and high-profile."

Notably, no mention the place is FIRE DAMAGED but that's fairly obvious even from the exterior, if you walk around what would be the left (east) side in this photo.

Here is some sales history: Sold by warranty deed, 12/31/2002, $140,000. Sold by warranty deed, 7/29/2005 for $102,000. Sold by warranty deed, 4/4/2007, $235,000.

Barely more than one year later, CitiMortgage is trying to unload this turkey for $18,500.


Anonymous said...

come on, you KNOW property values only go up - EVERYONE knows THAT! at least that's what my realtor and potential mortgage company told ME...


Johnny Northside said...

In the long run, these property values will go up. But it's a question of "how long is that long run" and is it cost effective to buy this particular property at this particular price?

Marilyn Sue said...

I am sure you have covered this before, but can you catch a new reader up by blogging about how this scam works? Why would the mortgage companies be trying to sell property at a price that no one would ever pay? None of this makes sense unless you explain the dark accounting that goes into it . ..

Johnny Northside said...

Well, with this particular property it may not be an instance of mortgage fraud but "predatory lending."

In other words, CitiMortgage must have known the buyers would never be able to make the mortgage payments and the buyers were fools to try...but CitiMortgage made the loan anyway, knowing the property would fall back into the hands of Citimortgage.

However...with the collapse of the housing market, it does CitiMortgage no good that the property fell back into their hands. It is crap, as it turns out, and if they think somebody will come along and buy it for $18,500 they are fools...mostly because there are much better properties at that price which aren't all tangled up in a high-profile lawsuit.

But on the subject of mortgage fraud...I'm no expert, here, but generally somebody buys a property on the cheap and then acts like they made some improvements. They take out a mortgage to get more money than they paid for the property.

Then they sell the property for an enormous jacked up price to some "straw buyer" who promises to live in the property...but, in reality, Mr. Straw Buyer is going all over the place, promising to live in various properties, taking out mortgages to buy the properties from different and various mortgage companies.

Straw buyer sells to another straw buyer, for an even higher price. They keep this up until they can't anymore, until the prices get ridiculous. The last straw buyer is either a fool left holding the bag or a willing fool, who exchanges their credit rating for a cut of the ill-gotten proceeds.

There are many variations and complexities and I don't know if I'm explaining it all right...but generally mortgage fraud involves unrealistically inflating the value of the property and a series of people (who may even be involved in identity fraud) taking out increasingly big mortgages.

In order to get the mortgages, they lie about their intention to live in the property, saying it is a home, not an investment. In reality, these people are going to multiple mortgage companies and telling the same lies, over and over, buying multiple properties.

A few big fish have been caught, like Universal Mortgage and T.J. Waconia. (Technically, T.J. Waconia's principals pleaded out to mail fraud, for the record)

But it's my assertion mortgage fraud is all over the North Side, and plenty of "little fish" have just been allowed to swim away, while much political hay has been made of the "trophy fish" of Universal Mortgage and T.J. Waconia.

So far.

Anonymous said...

must have forgotten to use my sarcasm tags - of COURSE not all property goes up all the time and it can be decades before it reaches a point where one can sell for what one paid - THAT'S reality in real estate.

next time i will try harder to be more sarcastic.


Johnny Northside said...

In the long run, though, the trend really is ever upward. That doesn't mean one can make a profit, though, after taxes and upkeep. But compared to RENT? Oh, my is gold and rent is the devil.

Anonymous said...

property costs gold but i'm not sure property is gold. i just don't buy it - literally and figuratively.


Johnny Northside said...

Well, like I said..."compared to rent." Compared to taking a pile of money each month, rolling it in a tight wad, and flushing it down the commode.

But not everybody thinks like that. I'm constantly amazed by people's willingness to turn over 40 percent of their income (or more) every month just to have a roof over their head. I'd rather have a leaky roof in need of repairs as long as I, personally, own the roof.

Anonymous said...

and i'd rather have a roof that someone else has to fix - that sh*t is expensive. and i'd rather not deal with the entire mortgage loan industry/real estate folk out there - the only people they help are themselves (to your money). and i rather not pay twice what the house is "worth" in interest over the life a long a** loan. and i'd rather not have to stay gainfully employed for 30 straight years just so i can make the mortgage payments. and i'd rather not pay 6% to sell a house when i get up and move to the next city.

i'm amazed that so many people take the plunge into real estate. but i'm aware not everyone thinks like this.

Anonymous said...

sorry, that was me --c

i'm also aware this has gone entirely off-topic, and aoplogize and will play nice.


Johnny Northside said...

It's a good discussion and the "off topic" aspect doesn't bother me. Also, I think you have been "playing nice." It just sometimes takes me a while to get around to hitting the button to approve the comments.

Your comments about the slavery aspect of mortgages are all true. HOWEVER--! That's the wonder of the North Side. Houses are so affordable you don't have to indenture yourself with a 30 year mortgage.

I don't see the sense in a 30 year mortgage at all. Instead, buy something affordable, fix it up, improve the neighborhood. Live within your means. Be frugal. Your points about mortgages only prove my point about property ownership on the north side.

Skip the 30 year mortgages in the plastic suburbs. Buy something affordable on the north side, dig in, and work to improve the neighborhood. Your property values will go up. At some point, you'll want to sell that house and get a bigger, better house.

There's a lot to be said for real estate ownership compared to throwing away money on rent. The bursting of the real estate bubble doesn't change that. In fact, it creates wonderful new opportunities for people who have a good head on their shoulders, who seek ownership and a home instead of speculative riches.