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Give Me A Way To Get Out, Let Me Give It Back

A report from The Day in Connecticut. “Suzanne Simpson was living in Groton in 2008 with a $110,000 mortgage, a part-time job and was soon to be single. Looking back, the 68-year-old wonders how it was possible she had the good fortune to land in a $358,000 luxury condominium in the heart of New London in 2011.”

“And despite her love of the well-appointed one-bedroom unit at New London Harbour Towers — she raves about the craftsmanship — she now is trying to figure out how to get out. She’s not alone.”

“A group of at least a dozen homeowners living at the 8-year-old development at 461 Bank St. have enlisted an attorney to help not only challenge what they consider inflated home values but seek ‘to be made whole,’ in the words of attorney Gordon Videll, who represents the group.”

“‘I absolutely love my home but I can’t afford it,’ Simpson said. ‘We’re tethered to this building. Things are unraveling. Nobody can sell. Nobody can leave. I can’t retire. I’m stuck.'”

“Taxes play a major role in the reason Simpson said her place is becoming unaffordable. She is paying about $10,000 a year in taxes and says the $345,000 purchase price of her home is $120,000 less than the value in one appraisal.”

“Coupled with the conclusion of a five-year tax abatement afforded to new owners, the cost is too much, she said. Videll agrees taxes play a large role in the reason units are not selling but he argues Simpson’s and the rest of the group’s concerns rise above the level of simple buyer’s remorse.”

“Videll claims the values established for the 52 units at the 461 Bank St. condominium complex are based on a flawed premise. He said some of the owners, especially some among the first group to buy into the concept, were able to move in with little or no cash down.”

“He said Simpson likely would not have been approved for a mortgage had New London Harbour Towers not loaned her the money themselves and allowed her to stay essentially rent free for two years until she applied for a reverse mortgage, which are federally insured and allow seniors to convert their home equity into cash with no monthly mortgage payments.”

“Harbour Towers performed house swaps and enticed other people in by giving no payment loans if they agreed to get reverse mortgages within two years — all in an effort to get people to buy in at prices that ultimately boosted the values of the entire complex, Videll said.”

“‘You will see that the purchase prices in many cases are very high but in some cases there was no money transacted at all,’ Videll said. ‘We’re seeing a pattern repeated around the country with developers to secure government financing on undervalued properties,’ Videll said. ‘Moreover, they specifically targeted people over the age of 62 who would qualify for reverse mortgages.'”

“‘It’s certainly unethical … and comes right out of the script of ‘The Sopranos’ season 7, episode 4,’ Videll said.”

“The first sale in 2010 was of a 2,000-square-foot penthouse that sold for $681,400 at a time when the real estate market was in the midst of a downturn. Simpson said she saw an advertisement in the newspaper about the house swap arrangement and spoke to Harbour Towers developer Tony Silvestri.”

“As it turns out, an independent appraisal of her property puts the value at $225,000. The appraisal was completed by Norman Benedict Associates Inc., hired in 2017 by a group of homeowners fighting the city’s assessments. The real estate values outlined in the report, which looks back at appraisals completed in 2013, were in many cases 50 percent less than purchase prices and more in line with other residential units in the area and not just purchase prices of other Harbour Towers units.”

“‘This is extraordinarily complicated. We’re talking about layers of purposeful manipulation and it’s horrible,’ Videll said. ‘Nobody can sell. The game was get as many units sold at high values as quickly as possible to create a false market, so when conventional financing was pursued by buyers, they can point to comps at Harbour Towers. Now you have one- and two-bedroom condos going for $300,000 to $400,000. One bad deal can manipulate an entire neighborhood.'”

“For Leslie Christie the rise in the city’s tax rate has her taxes on her ninth-floor penthouse ballooning to about $17,000 annually. While she still marvels at her luxurious surrounding and sweeping water views, Christie said she has been trying to sell and can count on one hand the number of people who have shown interest.”

“She doesn’t see a way to recoup the money she and her mother spent — $678,000 — considering one appraisal puts the value at just $375,000. ‘I feel like a caged animal now,’ Christie said. ‘I didn’t do the kind of homework I should have done.'”

“Simpson said that, however unlikely, she wishes to ‘go back financially to where I was.’ ‘Just get me out of here. Give me a way to get me out. Buy my unit back. Let me give it back,’ she said.”

“Christie predicts that if nothing changes ‘more people will walk away … just to stay solvent.'”

This Post Has 57 Comments
  1. ‘You will see that the purchase prices in many cases are very high but in some cases there was no money transacted at all,’ Videll said. ‘We’re seeing a pattern repeated around the country with developers to secure government financing on undervalued properties,’ Videll said. ‘Moreover, they specifically targeted people over the age of 62 who would qualify for reverse mortgages.’

    ‘It’s certainly unethical … and comes right out of the script of ‘The Sopranos’ season 7, episode 4,’ Videll said.’

    Oh dear…

    1. “I absolutely love my home but I can’t afford it,’ Simpson said. ‘We’re tethered to this building. Things are unraveling. Nobody can sell. Nobody can leave. I can’t retire. I’m stuck.”

      Hehe… the lap dog won’t get its teeth cleaned anymore.

        1. Oh, brother, I’ve learned a few things about stucco since I’ve lived in this part of Florida (north central). Stucco over frame is a disaster. They’ve got a neighborhood up here called The Sliding Wedding Cake Homes.

        2. Actually I think that taxpayers will be stuck when the geezers die and the government guaranteed reverse mortgages are settled.

    2. And for the Sopranos fans in the house, he’s got it backwards. Season 4, Episode 7 is the one where Tony buys the houses in downtown Newark through HUD, strips the copper and aluminum from them and resells them at an inflated appraised value. This is nothing like Old Boomer Lady who for some reason took out a reverse mortgage and now says she is a victim.

      ‘I didn’t do the kind of homework I should have done.’”
      Ben – We need a FB Quote Hall of Fame. This is just delicious!

  2. ‘Just get me out of here. Give me a way to get me out. Buy my unit back. Let me give it back,’ she said.”
    f nothing changes ‘more people will walk away … just to stay solvent.’”

    This could just as well as been from 2008.

    1. Classic Boomer fecklessness. It’s all about me me me, heedlessly creating huge messes while trying to get over, then demanding that someone else suffer the consequences of their mistakes and clean up their messes, while they go screw up something else.

      1. “Classic Boomer fecklessness. It’s all about me me me, heedlessly creating huge messes while trying to get over, then demanding that someone else suffer the consequences of their mistakes and clean up their messes, while they go screw up something else.”

        I’m a boomer, go f… yourself. You might try working on your sentence structure while your at it.

  3. “the $345,000 purchase price of her home is $120,000 less than the value in one appraisal.”

    Well well well what have we here. A little bit of a problem but not just for the sucker. Looks like we got some defective appraisals here. Bunches of them going back to 2008.

    You mean to say the “professionals” with the obligation to the transaction failed to detect this rather uncomfortable ‘problem’? What about the guy who futzed the appraisal? And the guy that gave the wink and nod and accepted it?

    We’re going to work on this.

  4. the 68-year-old wonders how it was possible she had the good fortune to land in a $358,000 luxury condominium…

    A spectacular story of greed, stupidity and moral corruption.

    1. Exactly. Note the utter lack of any sense of personal responsibility or accountability for the poor decisions that led to her current plight. Always a victim needing to be made whole by someone else.

        1. “At age 68 it’s too late for “feminine wiles.”

          Are you sure of that? I was going to say something, but since I haven’t been on the blog for a while, and it seems that Ben has done some major clean-up in terms of social commentary not related to housing, I’m keeping the old lip zipped.

          1. Confirming that it is not the case at all. Some things are not so much based on age alone.

            It might be just me, but a woman trapped in a horrid debt cage of her own making couldn’t be attractive, at any age. I don’t want my tail shut in the door.

        2. She can always accuse a judge of touching her 50 years ago and then cash in via gofundme.

          “Sorry, I cant remember specifics – but I’m sure it was him”

  5. I wonder how much credit default swap activity underlies these transactions. Millions of dollars? That’s what brought down the house during bubble 1.0. Think it went away? Think again. It’s on steroids now. It’s so opaque, even the Fed can’t figger it out.

    https://www.federalreserve.gov/econresdata/notes/feds-notes/2016/a-look-under-the-hood-how-banks-use-credit-default-swaps-20161222.html

    What is a credit default swap and how does it work? https://www.khanacademy.org/economics-finance-domain/core-finance/derivative-securities/credit-default-swaps-tut/v/credit-default-swaps

    1. Not to rely to my own comment, but just to clarify, the first paragraph or two of the Fed article is all you need to know. The rest of it is dense financial speak to explain why they haven’t a clue.

    2. In sum, our data suggest that banks may be largely taking additional credit risk through the single name CDS market rather than using the market largely to hedge existing credit risk.

      Ruh-roh.

  6. My first impulse was to say “2yrs of free rent, plus perhaps some cash out from the reverse mortgage (or maybe that all went to the developer), yet you’re a _victim_?

    But in truth, I think these fools were victimized. I says fools, because they thoroughly demonstrate the “fools and their money” aphorism. If they had taken part in this scam with their eyes open, they would be scammers; my guess is that none of them realized that they were unwitting participants in a scam to defraud the taxpayers, who will be the eventual bagholders.

    Their only escape is to stop paying, hope for a short-sale approval, and prepare for an eventual foreclosure.

    1. Lots of culpable parties here, none of whom are blameless, to include the so-called victims. But maybe the most striking thing is how such financial chicanery has become the norm, with no interference whatsoever from regulators and enforcers. Indeed, no one is looking out for the public interest, including the interests of fools who are easy marks for the myriad swindlers who populate the REIC and mortgage industries. You can blame the fools, and I do, but something is very wrong when you have such systemic fraud and gaming the system being committed with impunity. Senator Running Deer and her ilk may posture and bloviate, but the entire system is rigged in favor of the grifters, with no one looking out for the public interest or safeguarding the integrity of the financial system. That to me, at least, is the most troubling aspect of this whole vignette and the larger story it tells.

      1. Right on, Boo. You said exactly what I wanted to say. That’s exactly how it is, and even those who pride themselves on good financial habits, on having their house in order, can get a rude shock one day and THEN who are they going to feel superior to, when the bail-ins come for them? Even if you pay cash for shelter, what’s to prevent some swindler from filing a lien against you just because he can? NOTHING! And you won’t believe what happens next! Legal bills out the wazoo. We’re just about at that point, because when anything goes, anything will.

        1. After the 2008 financial crash, not a single Wall Street banker went to prison despite massive fraud and criminality. “Too Big to Jail” aka the Holder Doctrine, remains in effect as the singularly worthless SEC just gave Elon Musk a “stiff fine” but no criminal penalties for blatantly illegal stock manipulation. Until there is a complete purge of our captured, complicit regulators and enforcers, to include prison time for dereliction of duty, our entire financial system will be rife with fraud, committed with impunity.

          https://www.cnbc.com/2018/09/29/sec-settles-charges-with-teslas-elon-musk-will-remain-as-ceo.html

      2. Globalism depends on the developed world to go into debt to increase its consumer spending to buy goods of the developing world. It is just like our porous borders, people would ask why it was so hard to deter illegal immigration and the real reason is that the PTB really did not want it deterred. McCain was only saying build the damn wall when he was running for office. After that he did not want a wall, none of the globalists do. The illegal strawberry pickers earning $12,000 year did not buy that McMansion due to their cleverness, it was due to the system being structured to allow people to buy more house than they could afford. What did go wrong is we were suppose to be in a political union with Canada and Mexico prior to the collapse. The PTB fully intended to run the same play again prior to Trump winning the election. Now, they will deflate the bubble until another globalist wins and then inflate it to make him or her look good. They know bubbles cannot last for ever, but they only need to keep them going until after it is too late to turn from global government. Then, all the developed world will be much poorer, the developing world will be richer and about 100 people will be very rich and will run the world like feudal royalty.

        1. So when, exactly, was it the US went back under the British Crown? Was it around the time that the Federal Reserve was instituted? I always suspected this, but POTUS confirmed it recently, although not in so many words. Allies, my arse.

          1. Exactly. It took them almost 150 years but the bankers got us back under control. So their media told us we could not win against China but look at this: https://finance.yahoo.com/news/china-manufacturers-feeling-pain-trade-011055386.html

            The PTB were allowing China to expand its economy and military power at our expense. China’s plan was to grow into its debt, fast growth does not seem so likely now, I hope they have a plan B. Unfortunately, its Plan B is to work with the globalists in the US to remove the tariffs by removing Trump.

      3. “…the entire system is rigged in favor of the grifters, with no one looking out for the public interest or safeguarding the integrity of the financial system.”

        So long as FIRE sector beneficiaries of regulatory torpitude continue to shower politicians in both parties with campaign contributions, the situation seems guaranteed to continue regardless of which party is in power.

    2. I disagree. If you are dumb enough to sign the papers for all of this without doing your research you deserve to lose a lot of money. No one put a gun to her head, just like no one puts a gun to someone’s head for responding to a Nigerian Prince email. She wasn’t thinking of the loan terms, she “wonders how it was possible she had the good fortune to land in a $358,000 luxury condominium”.

      I’m guessing for years she went to parties bragging about her genius real estate moves, told everyone that would listen about living in a luxury condo and seemed to think she did no wrong. And how did that work out for her? She’s not a victim, she’s just dumb.

      1. You might think that grifters preying on the stupid and gullible is a simple case of separating fools from their money. Unfortunately, such unscrupulous practices become my problem when the lenders and mortgage brokers engaging in shady and quite possibly illegal activities and the FBs who walk away from their underwater shacks, end up crashing the financial system. In addition, the banksters have ensured that the Fed and middle class taxpayers will backstop their greed and recklessness. So it isn’t just a problem of greedy, stupid people like Ms. Simpson getting fleeced: it becomes my problem when I’m involuntarily forced to bail out Wall Street and have the Fed debase my savings and purchasing power with its money-printing.

  7. “The PTB were allowing China to expand its economy and military power at our expense. China’s plan was to grow into its debt, fast growth does not seem so likely now, I hope they have a plan B. Unfortunately, its Plan B is to work with the globalists in the US to remove the tariffs by removing Trump.”

    So, dan, bear with me here, it’s been a while and I’m trying to get used to the new format and new rules. First of all, there is no button for me to reply to your post like there was before, so I’m taking it down here. Secondly, weren’t you a bit of a China fluffer? I mean no disrespect, as you know, I always did like you, I just disagreed on that one point. Anyway, are you the original dan, and changed your mind? Or are you somebody else who took the handle? I’m confused.

    Now, assuming you are still in the legal biz, I find it interesting that finance and law are so intertwined, even more interesting that US law is based on the system of law developed by the Crown. And, in the end, it would appear that the purpose of “the law” is to support the banks. Period. Even though “the law” has to handle some additional messy stuff like murders, theft and all the petty details of life for the commoners.

    1. Pal, I am still the same ABQ dan and I respect you too. However, I was never a fluffer for China, I was a realist on China. I believed previously and still believe that until we had a president to confront China, it would continue to grow rapidly and was not close to an imminent collapse as most on this board were saying. Sorry when it came to me, I think too many people wanted to shoot the messenger. China did not collapse imminently as I stated it would not. I think that I saw the danger that Trump and Navarro see now and are trying to address. China was working it way up the supply chain with stolen and internally developed technology. The debt was serviceable with 6% plus growth. I think China is looking at an actual 5.5% growth right now but it is falling. I always said if you read my previous posts that China was overstating its growth but not by what people on this board was only by about 1% per year. For example, electricity growth was cited by many as the real growth of China. But China was developing a consumption economy which do not use as much as electricity and increasing efficiency in others. Even in the US where there is much less opportunity to improve efficiency, electricity growth was flat during the Obama presidency and many years showed negative growth when the GDP said around 2% growth.

      1. To understand what was going to happen if Trump has not won the presidency, look what Ford had planned and this is why it is attacking Trump over steel tariffs, they know that attacking Trump over what they really wanted to do would not play in public opinion:
        https://www.wsj.com/articles/ford-scraps-plan-to-import-china-built-small-car-due-to-tariff-cost-1535729401

        The big automakers fully intended to make most of their cars in China and ship them here and to Europe. Now, with the tariffs that is not possible. Without the market for vehicles China has a surplus of auto capacity and a surplus of steel plants. The SOEs could have paid their debts for plants with the US as a market but take us out of the equation and repaying the debts is very difficult. Now China’s governmental debt is low, but it is going to have to bail out its corporations unless it reaches a deal with the U.S. This years elections are the second most important elections maybe in the history of the US. We dodged the bullet in 2016 but the globalists are not defeated just wounded.

        1. Sorry you can try to rewrite history but you did not like it when I disagreed with you and saw the strength in China so you had to demonize me and make me a supporter of China. There is nothing I said three years ago that Peter Navarro would have disagreed with, China was and is a threat to this country. It was the PTB, that wanted people to believe that it was in danger of imminent collapse so action against it was not necessary. Like Trump, the PTB are capable of three D chess. I was capable of seeing the 3 D moves and capable of seeing someone who was able to confront them.

  8. The tragedy here is that all of this nonsense took place in 2011, and it didn’t have to happen at all. Like many, this woman managed to get through the 2000s bubble financially intact, only to get roped in to the deliberately engineered rebubble. Like surviving a plane crash only to get run over by the ambulance.

  9. So many housing market indicators have never been worse since the great financial meltdown (2007-2009). What could this portend?
    —————————————
    Markets
    Builders Slump as U.S. Housing Market Shifts to the Slow Lane
    By Felice Maranz, Sho Chandra, and Prashant Gopal
    September 24, 2018, 12:15 PM PDT
    – Stocks are down 21% this year, on track for worst since 2008
    – Housing is stalled on high prices even as the economy grows

    The housing market is stalling, and homebuilder stocks are feeling the pain.

    The S&P Supercomposite Homebuilding Index is down 21 percent year-to-date, on track for the biggest annual drop since 2008, when it fell 32 percent. That’s even with tax cuts, unemployment near the lowest since 1969 and a real-estate developer in the White House. What gives?

    https://www.bloomberg.com/news/articles/2018-09-24/builders-slump-as-u-s-housing-market-shifts-to-the-slow-lane

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