Friday, February 12, 2010
Hawkman and Reitman on 1564 Hillside!
Guest post by the Hawthorne Hawkman, photo by John Hoff, and image from www.tvfanatic.com.
This blog has long questioned what really happened with the transaction at 1564 Hillside Ave N. Larry "Maximum" Maxwell, who stole the identity of a John Foster, took part in the purchase of 1564 Hillside Ave N.
Keith Reitman, the seller in this transaction, has often sparred with Johnny Northside over this particular issue and other matters. Like the Green Arrow and Hawkman, Reitman and I have had our political differences as well (although the image above is for dramatic purposes only). So I was naturally quite surprised to receive a phone call from Reitman this week, wanting to discuss, on the record, his version of events regarding 1564 Hillside Ave N.
This blog is happy to provide a forum for such dialogue, so here is a summary of that conversation...
We exchanged pleasantries, during which Reitman said that even when he disagreed with what I was saying, he felt that I was at least moderated in my views. We kind of danced around the obvious topic for a bit before getting down to the business of 1564 Hillside Ave N.
Reitman was emphatic that he had the property in good condition prior to the sale, and that most if not all of the pictures seen on this blog and elsewhere were taken after the property fell into disrepair once he was no longer the owner. Specifically, Reitman claimed to have put in radiators, a second-floor bathroom, and other items. He claims the property was in good condition at the time of the closing.
I asked how the deal was set up, and he said he had it listed with Tynessia Snoddy. He had never met or even heard of Larry Maxwell before this deal took place. This is important because Maxwell often controlled both sides of his deals as much as possible, and was, as prosecutor Brad Johnston claimed, the mastermind behind these fraudulent transactions. So the fact that Snoddy helped set up the deal in any way is significant in her own criminal proceedings.
Reitman then wanted to know what seemed odd to someone like myself regarding his part in this transaction. I listed several things on his part of the HUD-1/settlement statement. First, the payout to James Lang, then the Gill Construction item, and finally, the infamous $5,000 fee for...well, that part isn't exactly clear. "Why would a seller leave so much money in other peoples' hands at the closing table?" I wanted to know.
First off, James Lang and Keith Reitman owned this property jointly "from day one." So it makes sense that Lang would receive half (more or less, depending on their arrangement) of the proceeds at the closing table.
Second, Reitman was under the impression that the Gill Construction would be doing between $10,000 and $30,000 of work on the property post-closing. Reitman stated that the property had been used as a rental before, and might have needed some funds to fully convert its use for an owner-occupant. In this part of our discussion, he was concerned that the word "conversion" get used instead of "rehab," which could imply that the property needed work in order to be functional.
It was at this point where he and I had perhaps our most significant disagreement. Part of that, I'm sure, stemmed from the fact that I was aware of the Maxwell/Gill connection well before my time as Housing Director. I received a training specifically around Maxwell's fraud and how to spot it as a loan originator. So I admitted that I had rather extensive knowledge that perhaps Reitman didn't. Even so, in a non-fraudulent real estate transaction, any funds going for work to be done post-closing usually goes into an escrow account managed by the title company. The funds don't get paid unless or until the work is done. Keith said that the knowledge on those two items was not something he'd be expected to know as a seller. He used the analogy that he's probably got more experience dealing with tenants than I do, just like I know more about the ins and outs of sales like this one.
That's a substantive enough argument, but I still wasn't entirely convinced.
Saving the best for last, I asked about the $5,000 on the HUD. What was that for? Windows? Consulting? What was this for, really?
Reitman indicated some hesitance around how to describe this, since there is still, to our knowledge, a criminal investigation into Tynessia Snoddy's activities. That's the smart way to play it and I don't blame him one bit for the cautious approach under the circumstances.
But it was NOT for windows. It was paid out as a consulting fee for having the deal set up. Once again, I expressed my skepticism over this aspect of the deal, and Reitman claimed to be much more experienced in the purchase of properties than their sale.
We talked a bit more, including his continued attempts to alleviate my skepticism entirely, and my thanking him for his volunteer work in and around Jordan.
(End summary of conversation, begin Hawkman commentary)
The blog over at Hillside Chronicles got a very similar earful from Reitman, and we discussed why that might be. The cynic in both of us said that perhaps the story is too well-rehearsed, but then again, when you're telling the truth you don't have to change your story around at all either.
Reitman's story reminds me very much of one of the last predatory loans I saw when I was organizing for the 2007 Minnesota anti-predatory lending legislation. The borrower got hosed in so many ways, and the mortgage broker walked away with a bundle of cash. The thing is, the loan in question then was a cash-out refinance, so the borrower also got over $30,000 in cash from the deal.
In that situation, there was no doubt that the engineer of the loan had a malicious intent, and carried it out against the victim (although I agree with the Hillside post; even if Reitman is "innocent," he's by no means a "victim" here). However, the borrower had no qualms about ultimately depositing that check in his bank account. For that kind of money, he ought to have had someone check out those loan docs from stem to stern. But by virtue of signing the check and depositing it in his account, on some level there is an acknowledgment that he endorsed the terms of the transaction.
And that's what I told Keith Reitman. By virtue of signing the HUD-1 and using the proceeds of the transaction however he wanted, Reitman affirmed this deal on some level. I can accept his version of events, but still feel that he bears at least some small portion of responsibility his part.