Post and photo by the Hawthorne Hawkman
When I first read a recent post on the Mpls Mirror blog, I was faced with something of a dilemma. The Mirror's articles show up so far down Google searches that it's clear they don't have the same readership as some other blogs. So by calling attention to the post, I might drive up the site views and Google rankings of the blog. But standing by and saying nothing kind of goes against my nature as well.
Ultimately, I decided to dedicate a JNS post (or more, but I think one will do) because the last time the Mpls Mirror tried to wade into such waters, the comment function mysteriously disappeared after a significant backlash. Consider the JNS blog an insurance policy that substantive commentary on all sides of the issue will be published.
The first mistake I noted was...
...Yzaguirre's lack of distinction between "equity skimming" and "equity stripping." This is a technicality, but since she goes into great detail on other intricate financial details, there is an expectation to get this one right.
I did organizing as a staff person and member of Minnesota ACORN, and helped bring some of the first cases of equity stripping to the attention of then-Attorney General Mike Hatch and then-Commerce Secretary Jim Bernstein. Thanks to their hard work, legislation was passed to outlaw the following practice:
"Equity Stripping Scams. This scam works in a variety of ways, but typically starts when someone promises the home owner that he/she will solve all their problems and keep them in their home. The scammer may promise loan money that never appears, or have the home owner sign a lot of complicated papers. The scam artist may convince the homeowner to sign the property over to him/her, claiming that only he/she can get a loan to save the home. In reality, the loan does not exist, and the homeowner becomes a renter in their own home, until they are eventually forced out by the inevitable foreclosure. In most cases, the homeowner receives little or nothing for their home equity, which has, in essence, been stolen by the scam artist. Under Minnesota law, homeowners must be paid at least 82 percent of the fair market value of their former homes (minus certain permitted costs or expenses) if they are not able to stay in their homes following a foreclosure."
(taken from the Attorney General Lori Swanson's website)
Second, Zillow? Are you kidding me? This site is famously unreliable. For one thing, it includes foreclosure sales in its calculations of value when in reality such sales rarely happen at true market value. For another, the loan to purchase (and I think, build) the property was taken out in 2007. The Mpls Mirror appears to use Zillow estimates (Can we ban the use of "Zestimates" please?) from 2010. In case readers aren't aware, mortgage markets and property values have hit some slight turbulence since '07.
And here's the REAL scary part. According to her calculations, guess what Jordan is paying in rent right now? MARKET RATE. The way this is framed reminds me of an old Letterman top ten list of things that sound creepy when said by John Malkovich.
While I'm at it, there is a minor point in need of correction: the Mpls Mirror post states that Hawthorne council promoted the NoMi Home Tour. That is not the case. I showed up at a few spots in case I could help out in my capacity as Housing Director, but the NoMi Home Tour received no official promotion from the Hawthorne Neighborhood Council.
There's nothing inherently wrong with publishing a bit of information before you have the whole story. But there appears to be almost nothing worthwhile here. About the only thing of substance in the entire article is the zoning issue, and I'm sure once JACC gets a staff person that will be addressed in short order.
So here's the deal JNS readers: you're now faced with the same dilemma. Publish comments on the Mpls Mirror and drive up the profile of that blog or stay away entirely. But now you may publish comments here as well. If there is another barrage of comments that don't jive with the Mpls Mirror's agenda, we'll see how long the comment function stays up.
I take issue with your point that sales of REO propety are not to be taken in as "market rate". The market is whatever a buyer will pay and a seller will sell at. This doesn't matter who the seller is. Especially when the very properties yo are trying to discard are listed in the MLS which is essentially "The Market". If you were trying to remove private non-mls sales I might bite. Now I think you'll disagree with this so let me give you one other example that might make more sense, I see it all the time.
ReplyDeleteTake a homeowner wanting to sell to move up. They are not in distress, making their payments and get a realtor to list their property at what they think the "real" value is. They refuse to use REO sales as comps and for some reason their realtor likes listings that sit so they go ahead and list as the price that makes the homeowner happy. Three months later no offers, they lower it slightly but not to the "real" market price which has now dropped. Six months later they either pull the home from the market or finally price the home properly and it sells. However it sells at or only slightly above comparable REO's. This is because while there may be some spread between a distressed REO and a dialed in owner occupied home, there isn't as much as you would like to believe and certainly not enough to remove REO's from comps and claim there is an entirely differen't market for homes.
How to you reconcile these points from the article? Are they true?
ReplyDelete"The property has a land use that is non-conforming to the current use.
There is no business or rental license on the property.
"
If so how does JACC explain doing business at a property that violates the very things they go after property owners for?
(Part 1 of a several part editorial in progress...)
ReplyDeleteIt is not surprising the the Mpls Mirror has another article that makes zero sense or is full of fallacies. We've seen this before on the Mirror site.
First, let's examine who writes the Mpls Mirror. Terry Yzaguirre lives in the Powederhorn neighborhood in south Minneapolis. A few years ago she used to cover some neighborhood happenings down there. These days it seems all she writes about is something about North, northside activists or northside elected officials.
Over the past year or so, I will list some of the people I have seen Terry with: Al "Mayor of Crazytown" Flowers, Farheen Hakeem, The former executive director of JACC, Zach Matoyer, Jill Clark (google their names together and read the 3rd hit courthouse news!) Michael Katch (google him too!), Don Allen, etc
The reason I list these folks she associates with is because Terry Yzaguirre is fairly UNknown up here in NoMi, but when you bring up the company she keeps, it all starts to make sense. She is one of the malcontents.
to be continued after work!...
(part 2 of editorial..)
ReplyDeleteThere was an executive director at the JACC organization that formed the partnership with Ackerburg & advocated to move the office to that house. That same executive director then worked out of that house for more than one year, maybe closer to two, not sure. My point is, why didn't that paid staff person get the zoning issue straight either before or during the time they occupied the house?
The current JACC board is a group of volunteers who have had to deal with a barrage of unpaid bills, unpaid RENT, unpaid utilities & unpaid taxes, missing office records & missing financial records, no staff to help, law suits to fight & defend, an organization to pull back together & it was almost run into the ground by the above mentioned staff person.
I say three cheers to the current JACC board who are making strides everyday to bring the organization back to a functioning, productive neighborhood advocacy group. Thank you to all the JACC volunteers!
@ Anon 7:41,
ReplyDeleteI don't exactly disagree with you; I think you make a very salient point. My area of contention would be that the market we're in contains an abundance of foreclosed/distressed properties that make it difficult to determine what a "real" value is. For the sake of defining market price points, I agree that your version is more realistic. But the Mirror argues that Zillow estimates should be used to trigger some sort of federal investigation, and that doesn't hold water.
Anon 7:48,
I actually did point out that the zoning issue was about the only factually correct item raised in the article. But as Megan pointed out, they had an Executive Director who didn't address this and now are being run by a group of volunteers. Given everything else that's happening in Jordan, this is a minor issue and I'm sure it will be resolved eventually.
If the JACC isn't in compliance with the zoning ordinance than it should shut down or be forced to move.
ReplyDeleteWe are hypocrites if we attack slum lords for not paying taxes or violating land use ordinances and then do the same things ourselves.
Hypocrites have no credibility and actually damage the cause.
Why didn't that execative director worker get the zoning before they moved the office there. How stupid!
ReplyDeleteIt appears the author of the story has backed up the data with the Hennepin County assessor's official appraised amount which is nearly identical.
ReplyDeleteJohnny, one can only surmize from your post that Ackerberg has skimmed equity rather than stripped. He stripped it when he leased it to an unwitting 3rd party. It is the difference between commercial loans and owner occupied homes. Something over your head.
Rental Market rates were not ever mentioned in the article. The point was made that a business is paying rent at a rate of nearly 3 times the Zillow amount for a market rate mortgage would be. It was your short sided conclusion that misread the article. THe point was also that the Neighborhood, who promotes homeownership is taking housing stock and not putting homeowners in it while paying a higher end cost. In the end it all equates to higher amount of funds used to pay the debt service of the inflated note.
ReplyDeleteLet me know if this is too hard to understand, because it appears that the blogger and his shills do not understand a lot of the working elements here. It appears that the article thinks JACC is being taken advantage of here and the board member need to stand up and make some moves.
Is it true that this property isn't handicap accessible? Please tell me that I am getting bad info. If so, I am embarrassed and ashamed.
ReplyDeleteANONYMOUS?
ReplyDeleteI thought all properties in Minneapolis had to be handicap accessable and also have any signs printed in English and Hmong.
ReplyDeleteWait... so the former executive director also picked a place that wasn't handicap accessible?
ReplyDeleteSo the dumb fuck picks a place that isn't zoned right, a place isn't handicap accessible, then he almost runs the organization into the ground, and now the board members are stuck cleaning up his mess??
Man, what a dipshit! I hope that former employee never works in Minneapolis again!
Megan,
ReplyDeleteYou say that the article is full of fallacies yet you cite no points in your 7 paragraph rant. In fact, you go on to use a point cited in the article (Improper zoning) to dig someone and somehow give 3 cheers to the current board who is about to sign an lease for a non compliant use.
Megan you are such a shill with very little substance, if any, to your so called contributions to the community. New flash, you are part of the problem!
Jeff Skrenes - You conveniently omitted the fact that the Zillow figures were merely a confirming outside source to the Certified appraisers for Hennepin County assessment for the property. THe writer must have understood that people in the peanut gallery would take the bait and bash Zillow thus agreeing to the Hennepin County Assessors numbers which is basically the same number.
As an alleged housing expert you appear to have no clue.
Mr. Skrenes you think you are good with numbers....tell us what you old pal Stu Ackerberg's current value is then? I will be awaiting your answer with baited breath.....but I will not be holding my breath either.
This exact post will be supplied to the Mplsmirror.com as it is doubtful that it will be posted on your one sided and edited comment site.
The linked article's author has a few legitimate points, but they are lost in a sea of misinformation on the mortgage business.
ReplyDeleteTo point at current market values (be it assessed or zillow or a market analysis) to generate a charge of equity stripping fails to account for the market value when the deal was done. While some might be impressed with the flashing of current Ltv guidelines, it isn't relevant. What was the value at the time of the financing. Maybe it was inflated based on what we know now, but that isn't unique. He'll, I'm underwater myself (per my current assessment and zillow), but many who financed 3-5 years ago are.
Using a cost analysis to determine if the rent agreement is above market rates seems like a stretch. How about doing an analysis on similar rental rates?
The zoning violation is a fair criticism. Calling the current board well intentioned volunteers doesn't change that.
The author should have stuck with those smaller and solvable issues. Instead, the attempt to create some sinister financial plot jumps the shark on the whole thing.
(sorry spelling, I'm on a handheld)
One has to wonder what exactly the agenda is when a blog (mpls mirror)determines that the most noteworthy item to write about is whether or not developer and a non-profit neighborhood agency are in cahoots in somehow making money from one rental property.
ReplyDeleteI am sure (sarcasm font on) that both parties profited wildly from this "backroom" dealing.
Why weren't any articles written (in the mirror) about the thousands that were ill-spent (and possibly illegally spent) during the tenure of the "old majority" at JACC?
Interesting post and argument etc:
ReplyDeleteTo all the Critical Anon's:
1. You are free to volunteer to find a new building.
2. You are free to volunteer to negotiate the lease/rent of that new building.
3. You are free to volunteer to then move what goods are remaining to that new building.
4. You are free to volunteer to contribute time,energy and $ to fight the numerous litigious BS Law Suits we are under. "All of which the plaintiffs have lost or appear to be losing.
5. You are free to volunteer to mow the lawn and pick up the trash at the JACC house.
6. You are free to volunteer to shovel the snow next winter at the Community Garden and the JACC house, as well as pick up the litter on the streets and spend 5/22 riding a garbage truck on clean up.
7. You are free to take all the bunk from all the non volunteers city wide that expect you to do it there way on your time, with your money.
8.You are free to volunteer your time and energy to close down the drug and prostitution trade, as well as attend all the vigils for those of our neighbors taken down.
9. You are free to volunteer your time to help our less fortunate neighbors fix their fences, shovel their walks and keep their properties in reasonable repair.
10. You are free to volunteer to work with our civic leaders on strategies and activities to make a better Neighborhood and a better city.
In short put; your time, your money, and your life, on the line where your electrons or at before you talk about Hypocrisy!
Hmmmmmmmmmmmmmmmmmmmmmmm
ReplyDeleteis there something strange going on here? The so called "Jordan Hawkman" which many suspect is really X-JACC VC Bd-Mbr now living in Egan or Bloomington after giving their house up to foreclosure has 7/15 posts on the Broken mirror, now speaking out on behalf of who? From Exile? (Talk about a conspiracy theory.)
PS: What shortage of houses are those that are suppose to be here rented There are for rent signs all over NoMi Land, looks like time for the boots its getting thick.
Actually pond-dragon the disabled are not able to do many of the things you suggest because the JACC has elected to discriminate against them by using a non ADA compliant office space. Perhaps someone knows where I can find a good ADA lawyer.
ReplyDeleteAnd John, you went to law school, are there punitive damages associated with ADA violations? There should be.
I don't care how well intentioned the JACC people are, that does not excuse them for breaking the law.
A troll comment rejected.
ReplyDeleteAnon 11:17 on 4/20 states that rental rates were never mentioned in the article. By "the article," I assume the Mpls Mirror blog post is referred to. In which case:
ReplyDeleteThe Mpls Mirror alleges "The tenant agrees to lease the premises for an authorized use for an above market rate..." (emphasis mine)
The Mpls Mirror also makes the following statement. "Typically investment properties in North Minneapolis are grading out at around a gross rent multiplier (simply number times the monthly gross rent) of 80 on the higher end of the spectrum in today's market."
The Gross Rent Multiplier is a very simple calculation, but not necessarily reliable for ascertaining value. And as Another Mortgage Geek pointed out, the current value of the property is irrelevant. What matters is the loan-to-value ratio at the time the mortgage was taken out. As long as the mortgage is paid on time by the Ackerberg Group, this is really a non-issue.
My guess is that some of the malcontents of the "old majority" saw the JACC minutes online (kudos to JACC for their openness and accessibility of information) and are trying to throw a monkey wrench into something as basic as whether JACC has office space.
I heard Jill Clark was a good laywer. Tehehee.
ReplyDeleteMr. Skrenes, using your insight into the Northside rental market -
ReplyDeleteWhat exactly does a residential home zoned for residential use only bring for rent when leasing to a business that is not a conforming use for the property?
Please supply a few examples to back up your information. The answer is that the rent allowed is $0.
Omit this comment like you have the last one and it will be posted on the Mplsmirror.com.
Hawkman,
ReplyDeleteBefore you dream up wild conspiracies you should consider the possibility that there are simply disabled people in the Jordan Neighborhood who want to get into the offices but can't because the JACC ignores the Americans with Disabilities Act.
If the Mpls Mirror and whoever's behind this smear were actually concerned with compliance with zoning or the ADA, then why does the article in question focus on the non-issue of financing and property value?
ReplyDeleteNo, the author and her supporters are falling back on those two rather minor items now because the financial accusations are baseless.
@The Real H.Hawkman as well as the fake-phoney hawkman...
ReplyDeletelet's not forget it was the incompetent ex-employee and ex-board members that struck up the deal to move into the house in the first place.
I'm betting it's the same incompetent ex-employee and ex-board members who are making up fake identities and trying to cause trouble now.
Get a life and do something positive.
I agree 100% with the first part of your statement Jeff and support the new board. But please, do not ever say that ADA issues are "rather minor". Perhaps that is true for someone who can navigate stairs or otherwise is not burdened with a physical disability. But for people who are handicapped the accessibility of public buildings is by no means a "minor" issue.
ReplyDeletePond-Dragon ~ You express my sentiments exactly!!
ReplyDeleteBy the way, Peter Rickmyer aka “Pete the Pedophile” first raised the zoning issue of the JACC house in a complaint to the city…it’s a red herring issue…interesting, no?
To Anonymous @ April 21, 2010 6:52 AM: if you have some suggestions as to the ways folks with limitation could contribute to JACC, feel free to make a list (as did the Pond-Dragon). I'm sure folks would be interested in hearing all positive suggestions.
To Anonymous @ April 21, 2010 11:27 AM: if you know of people in the community that would like to volunteer (disabled or not), please post their names and contact information so they can be contacted at:
http://jacc-flash-nomi.blogspot.com/2010/01/2010-challenge.html
The name and contact information submissions will not be posted publically.
To Anon @ 6:52
ReplyDeleteReally?
The garden, lawns, sidewalks and streets of NoMi are all Handicap accessable. Phones, computers and taking bunk from "Blog Trolls" are all handicap accessible.
As such an honorable volunteer citizen, you are now gathering names and details, names dates times etc. of all these NoMi-J handicap people that have been denied access to the JACC house because of their handicap.
Also being the most honorable of volunteer citizens, you are combing the other 72 neighborhoods of Mpls. to insure they as well are all Handicap accessible. We'll watch for your report on this Blog.
Because you aren't "Trolling" just to stir up trouble, you have nothing but the best intentions of the NoMi-J neighborhood in mind!
It seems to me that the Hawthorne Neighbodhood Board (without John Hoff) should evaluate Jeff Skrenes' job. He seems to have a lot of time to putz around on this blog during the day, and he seems to have lost focus on what the community needs. Maybe someone else would be more better suited for the Housing Director position.
ReplyDeleteYEP The "Troll" is out
ReplyDeleteThe broken Mirror has 20 posts, and No Surprise "The Jordan TROLL (renamed from Hawkman) for accuracy, has #'s, 6,8,9,10,11,12,13,16,18,19,20,
11/20 A troll's conversation with them self. Lets just call it like it is "SMEAR CAMPAIGN"
Hawkman,
ReplyDeletePlease tell us that the Hawthorne neighborhood association is in a location that is properly zoned and that the property is ADA compliant.
I was shocked and saddened to learn this about the JACC and really don't want to be severely let down again today.
I apologize deeply for not getting around to posting anything until after 11 p.m. You see, from noon until after 9, I was busy faithfully discharging my duties as the Housing Director of the Hawthorne Neighborhood Council. Then I went to the gym. The hobbit-on-steroids physique isn't something that just happens; you have to work at it.
ReplyDeleteOn to a few points. I did indeed do extensive research on what a rental property like the JACC house would draw as a market rate. Are you ready for my expert calculations? Here goes: $1420 per month with 2 yearly increases of 3% on a 3 year commercial lease. And that's a fact.
I do apologize for minimizing a legitimate need to be inclusive towards those with disabilities. However, I stand by my statement that the Mpls Mirror post considered this secondary to the attempt to smear JACC and the Ackerberg Group via unfounded financial allegations.
Furthermore, our fine parks are available for neighborhood meetings if we need to be accommodating to people with disabilities.
The Hawthorne office is in the process of getting its zoning addressed. There will be a post about it on our neighborhood blog and website, but the long and short of it is that we've been using a house that used to belong to a church next door. Once the church was sold and the parcel was split, the zoning changed to residential. The property hasn't been used as a residence for over 50 years, so we are essentially bringing the zoning into accordance with the historic use of the property.
It is a house built at the turn of the century, so it is unfortunately not accessible. We do have some plans to address that in the near future.
So... will the Jordan "Hawkman/TROLL" reveal himself, I wonder?
ReplyDeleteOr will he hide in the shadows the interwebs?
One comment deleted due to sexual vulgarities.
ReplyDelete