Dear Editor, I don’t know where to begin. I am putting my pen to paper in the hope of helping people who might be in a similar situation, or considering putting themselves into one.
August 2000. I went to the Catskills. I meet a very nice yungerman in my colony, that, from what I was told by a mutual friend, is doing “very well” in real estate. We schmooze a little, he takes my number.
Several weeks later, I get a call from this yungerman, who is a big “Baal Tzedakah”. “A deal just became available, a four family house in crown heights. “The building is Brick! The rent is federal-government direct-deposit paid-like-clockwork-on-the first-of-the-month section 8 tenants, and in perfect condition!”
Do I know anything about real estate? No. I’m a (self described) Feina Yungerman, having just left kollel to take my first job in the working world. I don’t want to be one of the mootchers of the government, on the dole getting section 8, Medicaid, or food stamps. I want to be a self sufficient yungerman, able to provide for my small-but-growing family, paying taxes and getting paid on the books.
So… here is my chance. Turns out that A deal came up, and since he doesn’t buy small deals anymore like this one, he is willing to “flip it” to me for a pittance above what he is paying. I meet the “flipper” at the property, look around… and the property looks, takeh, pretty nice. The block wasn’t a block that I would want to get a flat tire on, but nu, its not Boro Park… and my checks will be coming by mail, and I will be using a management company anyway… nu, so what’s not to like?
I ask around, and get the name of a good attorney. Check his references doing some homework of my own, and am told that he is a good attorney.
And… I am asked for a deposit of $20,000, which I can B”H come up with. I am explained that since the value of the house is much more then I am paying (don’t forget, it’s a steal of a deal that I am getting), the bank will give me a very high mortgage as a “seller’s consession”. “It’s all legit”, I am assured. Well- I’m not so sure… but since I have my well-regarded attorney, I wont’ worry about that- I’m sure the lawyer will keep me and my metziah of a deal 1000% legal and kosher. and I’ll be getting back the downpayment plus, at closing.
I go to the lawyer to discuss the contract. The lawyer assures me its airtight and not to worry.. The lawyer prints out a sheet of paper, which he attaches to the contract, which says “The Seller agrees to give the buyer a stipend of $70,000 at the closing, due to the condition of the property and the buyer accepting the property as-is”.
Ok. So with my wife proudly looking on, her gaonish’a husband, scribbles his name on the paper and on all the other papers which have “SIGN HERE” post-it stickies attached to them, and we are on our way.
Three weeks later, the closing is set up for the following afternoon. The seller has hooked me up with an amazing insurance broker, who got me insurance and an appraiser, who got me an appraisal… and the appraisal came in EVEN HIGHER then anticipated… since the market had gone UP in the time since the deal had been offered to me up until now!
I left the closing an hour later with $40,000 in my pocket. Not payable to me, of course, but as it was explained to me at the closing, that the checks couldn’t be made out to me since the bank didn’t really want to see it on the HUD… nodding to whatever the attorneys and seller said, since they were all in pleasant agreement, and after tipping the title person for all the work a few hundred dollars (yes, its customary, explained my attorney, who decided that $350 was a decent tip for all the work with the extra checks being disbursed and *wink* knowing when to leave the room and all…) huh? He also charges $2000 for himself.
Yes. I was now a Yungerman, but nisht stam a yungerman, but one with $40,000 in his pocket.. Would we splurge this money and spend it foolishly? No way! We immediately paid off our several thousand dollars of debt we had on our credit cards, as well as on top doctors for a medical condition (we aren’t going to ask our parents to help when we can pay for it… right?) And giving some tzeddakah to thank Hashem for his Chessed in giving us this gift… we had the management company managing the building, and things were blissful.
You said someone…A WHAT? What in the world is that? Squatter? You mean a chazakah, like the Gemora says? Some guy broke into the house and now the police won’t kick him out? Yep. You heard me right. Some teenage, funny-smelling-cigarette-smoking teenager noticed that there was an empty apartment in the building… (Oh, I must have not mentioned that by the time we closed three apartments were empty… giving me the opportunity to collect higher rents and big BONU$ES from the city worth $5,000 each!! Chasdei Hashem!)…
Anyway, so this teenager called Verizon, and had them come install a phone line in the building. So, you see, he explains to the police, I’m here and I have squatter’s rights. So you can’t kick me out, I have established residency. So please tell the landlord that I am here until he gets me evicted- and he had better provide heat for my apartment because brrrr… its been cold here the last few days. (Since the previous owner –oops. No it was a flip- so two owners ago had the utilities cut off for nonpayment for a week or so before they sold, and my management company had been slow in getting it turned on, since Brooklyn Union Gas wanted a large deposit to open the account anew, since there was such a large balance on the old account.. (Yes, of course… the money for the deposit came from the money we received at closing… where else?)
Oh and yes… in the apartment above him, a fellow teenager, this one with dreads (doesn’t every bachur and yungerman living in the big apple know what dreads and Rastafarians are? And what the Jamaican flag colors are? I mean, I do… now!)has taken the above apartment… and is having parties there every night in his DIRA… I mean bochurim are bochurim… even if they are from Jamaica and not Jewish…. No? especially when they have huge bulldogs?? Ones that even the police don’t want to deal with?
So, my building is getting four, oops I mean, one fat rent check form the city on the first of every month. So to pay the mortgage of $2600 a month, I should be covering that with under two rents… one more rent to cover the other expenses like taxes and insurance… leaving me with one rent per month in pure PROFIT! (not to mention having a free and clear, no mortgage, house after 30 years!!) MAMISH GEONIUS!
So, my four rents I am supposedly getting (plus the one-time bonuses from the homeless shelter of $15,000 in total!! Which I will get every two years hopefully!!) is now only one, which doesn’t even cover the mortgage, forget the other expenses. But i’m getting waaay ahead of myself.
At the closing, I see when I walk in, a yungerman sitting in the lawyer’s office, with the seller who was selling me the building. Which was kind of interesting, since I was 15 minutes early for my closing (ver volt gevust that closings aren’t always on time?) and they seemed to be sitting there with a “bank”, “title closer”… and all…
Turns out that this was the “sale” in which my “seller” was the “buyer”. The lawyer assures me that this is normal- that’s what a flip is, he explains to me.
So, when I ask for the keys, it turns out that the keys I’m given don’t work… so they give me the number to “their seller” who promptly returns my call and arranges to meet me to give me the keys. When we meet, we schmooze a little, find some common relatives… were practically related! Anyway, he mentions to me that he sells properties for a living, and that I probably got a decent deal on the property, since he sold it to them for $300,000 and so I paid what, he asks? 320,000?
WHAT? I paid $480!! And the appraisal came in at $597,700!! The guy is shocked. “what chazeirim they are”, he exclaims. “they just cashed in an easy “large”! so.. he feels bad for me. And so, he tells me that I now have his number and he will give me properties without any middleman. For example, he has a twelve family house on a beautiful block. he mumbles something about a 7A (whatever that is)… but its no problem to get it off once a new owner takes title. of course- er zugt dem emes!
“but I don’t have money for a down payment, I tell him. No problem he says- they have banks that will treat the house like a four family, and get the loan done as a residential loan, for which I can get 100% financing- and maybe even pull out 10 or twenty grand on the side for a little fringe benefit- since they pay closing costs when they sell a property.
Isn’t life wonderful? Such seyata deshmaya! Over supper that night, I explain to my wife how lucky we are. “we will soon be able to own 16 units- and make 5,000 a month in profit! With that money we will be able to live very comfortable and support our family”
I have a yiddisher kop. “if I buy two or three houses a year besides what I have now.. since the management itself is being given out and I found a good source of properties for cheap… I can put away $100-200 thousand dollars in the next five years or so… and buy myself an apartment to live in myself- like a mentch! And pay my good insurance and bills out of my ehrlicher earnings, not mooch off the feds like many people we know!
My parents and in laws are proud of me. They are happy to see me succeed- especially since my older brother is working hard for many years trying to make ends meet, but cant seem to make a living at anything he does. I offer to mentor him in real estate… since by now I own “apartment buildings” and people call me for advice… ( by now I owned several properties across Brooklyn, the Bronx, and staten island)
My parents and in laws are all “old-school”, all holding down full time jobs working for “other people”. No self employed blood in my family, not since arrival on American sores for sure not. (I did once hear of a great-great-great grandfather that had a general store somewhere in Galicia- so I guess some entrepreneurship does exist in the last 200 years in my family.)
Oh. Lets fast forward to the present.
I thought I was invincible, and that Hashem would look out for me. I am considering declaring bankruptcy, and giving up my properties to the city before I get arrested for not providing heat as winter comes along, since foreclosures can take a year or more in new York.
All my wife’s savings from her single years, all our wedding savings, everything we own (including a refinance of my personal resident to borrow our way out of trouble…) its all gone. and I refuse to borrow from friends since i have no way to pay it back in the foreseeable future.
I still have my gold-and-diamond encrusted tie clip and cufflink set. My wife still has her engagement ring. There are the two things we refuse to sell- unless we need to the money to do a shidduch with one of our children, we will keep these and hold them.
Everything else is gone. I don’t want to fall behind in my payments. And I am still sleepless every night, which is why I am typing this at this hour, since I am scared Chas veshalom of the FBI or some other lovely federal agents coming to get me. And then I’d have the stigma of having been arrested on top of all the maror and chrain I have been eating recently, not to mention that fact that I would not want to be ovier on mesira of a fellow Jew, since the peer-pressure of doing so, even in a case where my Rov and Posek would allow it, would damn me for life.
So, all you people out there that have been involved in preying on innocent yungerleit over the last few years of the boom… think deep and hard about if you owe anyone an apology. If you perhaps might suffer gehonnim for the anguish you have caused many an innocent family, while you gave tzeddakah to the worthy causes and had your names on plaques galore.
I’m not placing the blame for my personal tragedy on other people,. And I can only image some people, some meaning well, some with “naaseh lo ke’heter” after being involved on some part of shady deals in some way… will comment on this negatively. I have not typed five hundred pages- just glossed over some of the highlights of some things that come to mind, as I sit here and try to put my thoughts together…
You people, the ones who perpetrate such acts knowingly, putting myself and many others like myself in harms way and into financial (and marital, in some cases) ruin… there are tens of yungerliet I personally know, if not hundreds or even a thousand plus, that are now being swallowed alive by the mortgage crises , while the fear of getting in trouble for illegality keeps us paying the mortgages so that we stay clear, since “as long as you pay they don’t investigate”.
May Hashem have mercy on you all.
I’m better off in a big way. I have learned some really good lessons about life, loyalty, how not to leyg a tzveiten in a pekkel, how to feel for someone less fortunate then myself, and all about the galgal hachozer. have become a much better person from my experiences, may I continue with Hashems help!
And to all of you contemplating life on easy street… doing fraud on mortgages, fake gemach verifications, getting added as a signer on a bank account, getting verified at a fake place of employment…. All this stuff can and WILL come back to haunt everyone involved. even your mother and grandmother, possibly.
And to the sellers, buyers, and “bank” attorneys, title companies, appraisers, insurance brokers, mortgage reps… YOU KNOW WHO YOU ARE. Stay straight. Yesh Din V’Yesh Dayin…
and remember: If something seems too good to be true….. IT IS.
A Fellow Jew.