Wednesday, February 24, 2010
"Agitated Hawk" Response to Koenig's Email
Post by the Hawthorne Hawkman, image from www.stoneridgeeventing.com
The horse in the above picture goes by the moniker "Agitated Hawk," which is a rather appropriate, if understated, description of my reaction to Paul Koenig's letter defending his practices.
I started to write a response in the comment section of that post, but realized it would be very long and would fit better as its own post instead. So here are at least some of my grievances regarding Koenig's email...
Koenig's description of how great the neighborhood was, but the banks didn't like it, and then something bad would happen that would prove the banks right...well that just doesn't have any logic to it whatsoever.
Koenig's claims that his second coming in north Minneapolis was because he would be the lead paint savior are complete b.s. Lead paint is NOT that big of a risk. Yes, most houses in NoMi had or have lead paint. But that's only a safety issue if it's chipping or peeling, and THEN it only becomes hazardous if it's ingested, AND EVEN THEN it's primarily a safety risk to small children and fetuses.
So this false notion that there is some MASSIVE lead paint threat, and we ought to get down on our knees and thank baby Jesus for sending us Paul Koenig and Pamiko Properties, well, that's one of the few things Koenig possesses that's actually worth LESS than a Dream Home.
I also don't buy his excuse for what happened with the interest rate. There had to be SOME trigger that made Minnwest decide to raise the rate as much as Koenig claims. What was it? Late payments? The sudden realization that with cross-collateralized properties they were going to get hosed? Even if it was that the market forces that may have nothing to do with Koenig's loans meant everything was a greater risk, Koenig had a responsibility to KNOW that before he SIGNED ANYTHING. I can forgive an average person for missing the fine print on an adjustable rate loan. But Koenig is (ok, WAS) a seasoned property investor. When taking out a loan of this nature, there's no excuse for someone like Koenig to be unaware of the worst-case scenario.
Finally (for now), the hardest pill to swallow is this notion that having more than one property on multiple lines of credit is "standard" for commercial real estate loans. Granted, I have little direct experience with such products as I did personal mortgage loans myself. But EVERY SINGLE PERSON I've talked to who HAS had such experience has said that this type of activity is a MAJOR indicator that fraud took place. Sorry Paul, but like most of your letter, I'm not buyin' it.