Post and photo by the Hawthorne Hawkman
When I was in college, one history professor who taught a class on eastern European and central Asian history was particularly troublesome for me. I remember probing for clues about the final exam and asking, "What particular topics should we know well in preparation for the final?" He responded dryly: "Well, everything." And he wasn't joking. I didn't do too well on that final, busting my tail for a B-minus and considering myself lucky.
But I think of that professor's attitude in relation to the housing mess that Paul Koenig (pronounced Kay-neg) has inflicted upon north Minneapolis. Koenig should be in jail or at least face civil charges so steep that they'll bankrupt him. If neither of those things happen, then we on JNS are dedicated to examining every last detail of his cluster bomb of foreclosures so that this does not happen again by Koenig or anyone else. What's most important in that regard? Well, everything.
So when I have the chance I've been stopping by the Hennepin County Government Center to research Koenig/Pamiko/Marklee properties. Eventually I'll do a comprehensive post of what I've found, but as I come across particularly interesting histories that are extensive enough to merit their own post, those will be published. One such scenario presented itself at...
...2402 4th Avenue South. This is a multi-unit structure that has been part of a Koenig mess since at least 2004.
On July 23, 2002, David Kohlenberger, the other half of the Dream Homes Development LLC and DPK Properties LLC (David, Paul, Kohlenberger/Koenig. These guys are real creative with their LLC names) purchased it with a $465,200 mortgage from American Summit Mortgage Corp. I thought for sure American Summit would have imploded, but I guess not.
On July 21, 2004, Kohlenberger/Dream Homes Development LLC took out a mortgage from Guyer's Superior Walls in the amount of $147,393.84. Koenig and his buddy must not have made a single payment, at least initially, because on October 20, 2004, GSW filed an intent to foreclose.
On December 15 2004, A $75,000 lien was filed against the property by Morrison, Fenske, and Sund. Eighteen parcels were listed, but only legal descriptions were given. This was likely a part of the court case regarding fraudulently inflated incomes of many DHD/DPK properties.
On February 16 2005, MERS (trust me, you don't want me to try and explain what MERS is right now) filed an intent to foreclose on the property, listing David Kohlenberger as the owner.
Despite the ever-changing list of owner entities (Kohlenberger to DHD to DPK), I did not see a formal transfer of ownership until February 17 2005, when DPK filed a quitclaim transferring ownership to Marklee Construction, another known Koenig LLC. On March 1 2005, there was a Sheriff's levy filed against this property. I had never seen such a document before, and neither had the helpful employees at the desks. But as far as I can tell, this essentially says, "Gee whiz, there seems to be a lot of fishy title transfers happening here at the same time as a court case that alleges fraud. So how's about we just tell you all to keep DPK LLC as the owner for now?"
On April 12 2005, Franklin Bank did a $750,000 loan to Marklee Construction for the following properties, including 2402 4th Ave S:
3434 6th Street N
1418 11th Avenue North
1612 25th Avenue North
2101 Bryant Avenue North
2714 Bryant Avenue North
2722 Bryant Avenue North
2938 Bryant Avenue North
2616 Cedar Avenue South
2822 Colfax Avenue North
611 Edmund Avenue, St. Paul
3009 Emerson Avenue North
4858 Emerson Avenue North
2003 James Avenue North
1028 Knox Avenue North
1030 Knox Avenue North
1032 Knox Avenue North
1034 Knox Avenue North
1317 Knox Avenue North
2407 Lyndale Avenue North
3008 Lyndale Avenue North
1012 Morgan Avenue North
1312 Morgan Avenue North
625 Newton Avenue North
2324 Queen Avenue North
1717 Thomas Avenue North
On June 8 2005, the Franklin Bank mortgage was recorded as satisfied, although it is unclear if that referred to the $750,000 as a whole or simply the portion that applied to 2402 4th Avenue S.
On June 17 2005 the sheriff's levy was discharged.
On November 11 2005, Chicago Title Insurance Company filed a release of the $75,000 mortgage from Morrison, Fenske, and Sund to DPK LLC. The lawyers must not have been too happy about that, because on December 28 2005 they filed a request to be included as lien holders in any foreclosure proceedings.
On February 8 2006, Guyer Superior Walls' intent to foreclose was discharged.
Now if you're still reading and you're not confused YET, this should help get you there. A court order from a filing made by MERS says essentially this: "Hey, remember, ah, 'member how last year, we foreclosed on David Kohlenberger? Remember that? Well, none of those crazy title transfers really matter. We kind of, you know, still OWN this property. And we want it back."
So then Pamiko Properties LLC picked up the property from MERS and New Falls Corporation (the entity MERS was representing) on a quitclaim deed for $450,000. This happened on February 26 2006, and on March 3, a mortgage from US Federal Credit Union was taken out against the property in the amount of $602,250.
Then on September 19 2008, Aspen Funding LLC placed this property in a bundle of properties with their $500,000 loan that they made to Pamiko. And Pamiko must have really needed that half-mil because on November 5 2008 US Federal Credit Union filed an intent to foreclose.
The sheriff's sale occurred on February 6 2009, but Aspen must have missed SOMETHING, because they modified the loan on May 20 2009. They were also late to the game, filing their own intent to foreclose on October 26 2009. Sorry guys, Pamiko's all out of money.
On February 4 2010, a court order mandated the ownership of this property be transferred to US Federal Credit Union.
From the documents available, it's not entirely clear what happened to the money that was paid out on loan transactions that were later reversed. It's not known at this time if Guyer's Superior Walls or Morrison, Fenske, and Sund were paid for their interest in the property. And why did Pamiko pick up the property for $450,000 and then a week later get a loan for $150,000 more?
What is clear is that this blog will not rest until Paul Koenig is held accountable for the extensive, almost incomprehensible harm he has inflicted upon north Minneapolis.
MERS is fascinating. It's like a zombie computer program that conducts all sorts of property transfers.
ReplyDeleteInstead of focusing on small fries like Pamiko, hookers and butt glass JNS should go after whoever is behind MERS. Then you will be going after true evil instead of the sort of insignificant ne'er do wells you're going after now.
While all this is impressive, I don't see how it shows that Mr Pamiko did anything wrong. He's done alot for the community but unfortunatly things just didn't work out for his business.
ReplyDeleteThis Patrick is either a troll or so ignorant I don't have the inclination to explain the depths of the incorrect claim that "Mr. Pamiko" has done a lot for the community. I encourage others to ignore him too.
ReplyDeleteAnon 7:53, I consider MERS to be more like the man behind the curtain in Wizard of Oz, and agree that MERS should be exposed for what it really is.
MERS stands for Mortgage Electronic Registration Systems. Here's the basic premise: Technically every time a mortgage gets sold or transferred or spliced so a new party has rights to it, that should be recorded at the county level. Well, when the mortgage industry spliced and diced these loans on the secondary market, it became extraordinarily inconvenient to record every single entity that had an interest in the property.
So they created MERS. The loan gets put into this database and the owners get tracked in one central location. It really is quite a novel end-around for that process.
MERS is legal in Minnesota. There was a lawsuit maybe two years back stating that at the very least, MERS should not be the foreclosing entity. It'd be like having your car repossessed by Google.
That lawsuit, unfortunately, didn't go anywhere. And the other problem with MERS is that it makes it difficult or impossible for foreclosure prevention counselors or neighborhood groups to figure out who the real owner of a mortgage or property is.
Personally, I don't see MERS as "true evil." It's flawed and overreaching, but our neighborhood suffers more directly from the behavior of slumlords like Koenig than from MERS.
From what I can tell Mr Pamiko tried several ways to offer affordable housing to the community. He tried to put up dream homes in North Minneapolis. When was the last time someone got to live in a dream home who was poor. Unfortunately due to the high cost of permits and the real estate crash he was unable to pay his notes. Really no different than many residents of NOMI who found they could no longer afford their payments. It's a tradegy really the help he could have offered if we had a better economy.
ReplyDeleteGotta agree with Patrick. Pamiko has put a lot of improvements into the community.
ReplyDeleteIt would appear that the company must have had commercial loans that were simply cross- collateralized amongst each other. This is atypical for business loans done within the bank I am employed at. I think you are confusing this with consumer loans.
You would be far better served looking into MERS. It appears as if there is nothing here and the property picture looks fine to me (and it is not even in North Minneapolis anyway)
But Jeff, it is precisely because of MERS that people have an extraordinarily difficult time refinancing a loan or dealing with a lender. A normal person can't deal with MERS. Heck, MERS doesn't even really know what it owns.
ReplyDeleteThe big investment banks that set up MERS are the ones who are truly profiting from the housing crisis in NoMi. Some bit player like Pamiko is just a tick on MERS. MERS and the people behind it are the ones that have truly f'd up NoMi.
And don't underestimate your readers. We understand MERS and would love more of this kind of reporting.
Well, mortgage nerd, I'd contend that nobody is really profiting from the housing crisis in NoMi. MAYBE the Goldman Sachs investors who bet against their own products, but that's about it.
ReplyDeleteI haven't heard specific instances of MERS causing problems for basic refinance transactions, although I would certainly be interested in that. And I'd be open to going after them.
But so far it seems to me that the bigger livability issue in NoMi or my part of NoMi is the landlords who get commercial loans and buy up large swaths of properties, manage them horrendously, and are eventually forced out of the business by the market or by enforcement of laws and regulations.
I see your point about predatory lenders and icky slumlords. And I didn't mean to suggest that those people don't cause any harm to NoMi.
ReplyDeleteBut the problems with housing are the result of what the goldmans, fannies, freddies, and greenspans of the world let happen. The people you mention are just the actors that did the legwork to accomplish the "evil" that the aforementioned BIG players unleashed.
But thanks for your reporting and research. It is interesting.
By the way, Mortgage Nerd, the Northside Community Reinvestment Coalition, a group that I helped to found, has been aggressively lobbying Sens. Franken and Klobuchar for a strong Consumer Financial Protections bill that is currently making its way through Congress. So I am doing something on the larger scale too. I'm sure that bill will become watered down and not quite as effective as it ought to be, but we're doing what we can from Minneapolis.
ReplyDeleteWhile there's no doubt in my mind that the easy access to no-document/stated income loans facilitated many investors' purchases of properties in NoMi. Some of those people were small fish - borrowers who knew very little about rental property but had good enough credit to try their hand. Others were the small fish used as straw buyers, and then we've got the larger-scale investors.
What I've seen in my research (that has been admittedly somewhat narrow) is that the larger investors are NOT getting loans fueled by MERS or the securitized mortgage market. Danna D III went through Old Highland Bank, for instance. Paul Koenig has used loans from US Federal Credit Union, Franklin Bank, and Minnwest.
As far as I can tell, none of those loans was securitized or part of MERS or a similar system. They all appear to be portfolio commercial loans. And Highland, USFCU, Franklin, and Minnwest are all chartered by the state of Minnesota. To the extent that we pressure a body that is above these banks, it's the FDIC (already happening with Minnwest) or the Commerce Department.
I still see MERS as secondary at best in terms of the immediate impact on NoMi. If there are actual names or addresses that people want to forward to me, even confidentially, I could be convinced otherwise.
Will there be anything in the finance bill to get mortagage documents written in Hmong or to have Hmong mortgage officers for the Northside?
ReplyDeleteAt the end of the day:
ReplyDeleteIf you over leveraged (borrowed,swindled) and didn't pay back (and/or) you equity stripped the property (Slumlord and or ignorant investor or both) the big losers will be:
The mortgagor, bank (and bank investors),lost investment.
The neighborhood is robbed of its quality of life and its investment.
The neighborhood organizations, the neighborhood at large, City, county and state is "ROBBED" of its tax base and must "Pay" to get the neighborhood back in shape.
And Mr. TROLL: Don't feed us this crapola about helping the neighborhood: When you drop lousy tenants into a rental and don't keep the property up, or care who you dropped in, while you are equity stripping,and manipulating the system to your own ends, we hear them, we pick up their trash and we see the lousy unkempt conditions 24-7-365 of your highly leveraged dis-investment property, while you try to ghettoize our neighborhood, and then squeal like a child that you are getting picked on because we are calling you out for your devilish ways!
If you are such a great (Landlord) and providing such great advantage why the H-ll aren't you buying and placing all these great tenants and properties as your neighbors? You don't live here, you have no right of claim.
We see your hypocrisy and if you think you are able to hide behind some biblical passage you are sadly mistaken, your practices are "EVIL" and we will not forgive nor tolerate your "GREEDY" ways. As noted by a famous "Right Wing American" "YOU SERVE THE DEVIL AS GOD AND NOT KNOW THE DIFFERENCE" It is a long road from "Slumlord Hell to NoMi Warrior"
It isn't MERS, it's greed driven irresponsible swindlers that are gaming the system. "The truth she hurts"
PS: That of course is just my opinion!
ReplyDeleteThe person who goes by "Patrick" sure sounds a lot like Paul Koenig of slummy Pamiko fame. Heck, even the name "Patrick" is kind of like "Pamiko."
ReplyDeleteThe suit brought for a homeowner against MERS by Legal Aid was decided less than 10 months ago by the MN Sup Ct. The majority approved the flummery by which big capitol (Goldman Sachs, Citi, Deutsch Bank, etc.) is able to use a corporate entity to foreclose against homeowners but hide their shenanigans.
ReplyDelete"It is apparent with the benefit of hindsight that the ability of lenders to freely and anonymously transfer notes among themselves facilitated, if not created, the financial and banking crisis in which our country currently finds itself," Justice Alan Page wrote in dissent. "As a result of our court's holding, namely, that the mortgage transfers between MERS members need not be recorded before a mortgage can be foreclosed by advertisement, neither borrowers nor lenders will ever be able to hold anyone in the chain of transfers accountable. That is not sound public policy."