Post and photo by the Hawthorne Hawkman
I've been stopping at the Hennepin County Government Center on occasion when I've had other business to do downtown recently. In what little spare time I've got, I researched more about various slumlords and the mortgages behind them. I found out something new on the property above, 3053 15th Ave S.
On 5/23/05, a $575,000 mortgage to Marklee Construction, a company known to be operated by Paul Koenig, was filed against this property by US Federal Credit Union. But the dollar amount wasn't the only thing that was strange about the loan. There was also...
...a satisfaction of the mortgage filed on 2/23/06. US Federal Credit Union signed off on the satisfaction, but it was a senior mortgage loan officer, Pete Olson, who did the deed. Fellow mortgage geeks will recognize how rare it is for a mortgage originator to be involved in signing satisfactions in any way whatsoever.
But little quirky things like this wouldn't merit a blog post all by their lonesome. On 11/5/08, US Federal Credit Union filed an intent to foreclose on 3053 15th Ave S AGAINST PAMIKO, not Marklee Construction.
But wait, there's more! The original mortgage to Marklee Construction included a total of ten OTHER properties as collateral. The first seven are currently owned by private individuals, so it's possible that Koenig sold them properly. Those seven properties are:
1418 11th Ave N
625 Newton Ave N
1032 Knox Ave N
1034 Knox Ave N
3434 6th St N
2822 Colfax Ave N
1317 Knox Ave N
There were three properties besides 3053 15th Ave S that are currently listed on the Hennepin County website as owned by US Federal Credit Union. I believe it is reasonable to assume that US Federal foreclosed upon these properties while Koenig or one of his LLC's was the owner.
2200 Irving Ave N, which is boarded and vacant.
3128 5th Ave S
2324 Queen Ave N
None of these properties is on the Unabridged Pamiko list.
The more one digs into the Pamiko problem, the worse it appears. When will charges be filed against Koenig? That seems inevitable at this point.
Damn that's a nice building, is the inside a mess? It doesn't seem to be on MLS anyone know more about it?
ReplyDeleteI have a general understanding of investment real estate but, I admit that I am not an expert with investment real estate finance.
ReplyDeleteI am trying to understand the dynamics of the mortgages and properties you analyzed in your post but, I am not grasping your contentions. I don't see how you determined that there is anything to warrant charges against the owner. Other than the loan officer signing the deed, what red flags did you see to come to your opinion?
My first reaction to the other properties being involved with the mortgage was that it was a Blanket Loan where there are several properties financed on one note.
What am I not seeing?
Thanks
As I see it the crux of this particular issue is that a loan was made by the credit union in 2005. A satisfaction was filed on 2006. The credit union foreclosed its mortgage (or attempted to foreclose its mortgage) in 2008. But wait, the mortgage was satisfied in 2006.
ReplyDeleteOn possibility is that individual properties were released (partial satisfaction of the loan) as the loan was paid down. Another possibility is that the satisfaction was falsified.
Overall, the issue here is that this property owner had dozens of properties in North, so when the owner failes he really does become his own real estate market collapse.
Since the fellow has a right to own real estate, what could have been done differently? Should he have needed to show cash reserves? Obtain some sort of insurance policy? Should the City of Minneapolis require that such bulk owners of real estate bond their businesses in some way?
Hawkman,
ReplyDeleteI think you missed your calling. Some state attorneys general have mortgate fraud task forces. They would be well served by having you in their employ. It is obvious you have an aptitude for this sort of research.
I suspect your superpowers may come in handy as well.
:-)
Anon 3:57,
ReplyDeleteWhere there's smoke, there's fire. This blog has extensively documented some problems with Pamiko (try looking from around Thanksgiving of '09 through February of '10). There are enough indicators here that give credence to the belief that this is more than just a failed business venture.
Anon 8:36,
Without going into excruciating detail about the computer systems available for research downtown, It's possible that I missed something. However, here's how I see it:
US Federal Credit Union (USFCU) made a multi-property loan to Marklee Construction, which is headed by Koenig. Something odd happened in the way its satisfaction was filed. But since foreclosure actions were taken against Pamiko, another Koenig LLC, it's clear he retained ownership of some of the original properties. Now USFCU is left holding the bag, and what happened during the interim is still largely unknown.
Hawkman, I was Anon 3:57
ReplyDeleteNow I am even more confused because, I still don't know how you came to your conclusion on this?
The way I read your response, "Where there is smoke, there is fire" and "try looking around Thanksgiving '09" etc., you are suggesting that because of what has been written about his business before is reason enough for the deal you posted about here to be criminal?
I am asking for clarification on your opinions because, I own several properties and they are all under one loan (none of them are in n mpls).
I would think that going into "excruciating detail" is within reason when claiming in public that you are surprised charges have not been filed against the property owner.
Anon,
ReplyDeleteDid you go back and read any of the previous Pamiko posts? I'm not going to lay out in such detail again and again why this man deserves to be in jail.
There's a fine line between just being a shitty businessman/landlord and outright fraud. Based on the dollar amounts of Pamiko/Koenig loans and the complete lack of positive results at Pamiko/Koenig properties, I believe there is enough of an indication that something illegal has happened.
You can review them here.
ReplyDeletehttp://www.merchantcircle.com/business/Pamiko.Property.Management.Inc.651-776-4730