Still Dreaming of the Olympics? 5228 S. King in Washington Park
We last chattered about this 1903 Georgian mansion at 5228 S. King near Washington Park on the South Side in October 2007.
The lure was its location- nearly next door to where the possible Olympic Stadium would be built.
The house sold in May 2008 but is now back on the market.
A lis pendens was filed in November 2008.
Is the possibility of the Olympics nearby a lure?
Sheri Blakely at Sudler Sotheby’s has the listing. See the pictures here.
5228 S. King Drive: 5 bedrooms, 5.5 baths, 2 car garage
- Sold in February 1989 for $54,500
- Sold in July 2006 for $530,000
- Was listed in October 2007 for $999,000
- Sold in May 2008 for $1.15 million
- Lis pendens filed in November 2008
- Currently listed for $1.299 million
- Taxes of $6556
- Central Air
LMAO at whatever bank financed that 1.15MM mortgage. I’m guessing it was 100% LTV mortgage, too.
With this sort of behavior is it any wonder our banking system is on the verge of collapse?
And this bank wants taxpayer money to avail them of the consequences of their business practices of giving out these 1.15MM loans to aspiring Mini Trumps who bought a RE course off an infomercial?
Why are we not letting the banks fail who enabled these Mini Trumps/specvestors?
Love this old house. But is living near the olympic stadium really a plus? I couldn’t imagine the traffic, construction, and security nightmares that await the neighborhood. Additionally am I reading this correctly and are they trying to turn a profit from a purchase made during May of this year?!
The May 2008 purchase for $1,150,000 was financed with a $1,000,000 loan from Allegiance Comm Bk and $155,500 in seller financing. That was very lucky for the seller since they couldn’t get a sale when it was listed in the MLS for $999,000. They showed those realtors by finding their own buyer and saving the commission (LMAO.)
It sure didn’t take long to go into default. I wonder why that would be?
Will whistleblower rewards apply if the govt ends up with loans like this?
G:
Any idea why the assessor’s site doesn’t have the PIN attached to the address? 5228 S King, per the Assessor, is a vacant lot. The PIN for this lot doesn’t show up on an address-based search.
20-10-306-040 is the house. 20-10-306-041 is the vacant lot.
The 2006 purchaser bought the house with the vacant lot next door. They were lucky, indeed, to find that buyer earlier this year and not even have to part with the vacant lot.
curiouser and curiouser…
Why obvious RE fraud like this isn’t being investigated thoroughly and prosecuted to the fullest extent of the law is beyond me. Its very obvious there was fraud in the 2007 sale and someone walked away with a lot of money.
Obvious fraud like this isn’t being prosecuted because there was so much of it during the boom years 2001-2007, that the courts would be tied up for the next 15 years pursuing even the most egregious cases.
I never imagined I would see so much rampant, transparent fraud as what was being perpetrated. I was personally invited into a couple of really dodgy deals involving new multi-use (10 apts + storefronts) in Wicker Park and other places. No money down, lots of cash back at closing, no kidding.
Yes but Laura right here is an obvious case where a straw buyer allowed the 2006 buyer to walk away with 500k cash at closing and a 100% profit. Even this instance of fraud is so large so as to be worth pursuing and so simple so as to be explainable to any jury.
If there was only a will to follow the money, as they say.
Also I’d be willing to bet the mortgages were no doc loans as well. Now I understand why they call some of the NINJA loans: because like a ninja in the night this fraudster took 500k from the bank and didn’t even need to display a weapon or cause alarm. This wouldn’t be so sad if the banks had got our taxpayer dollars to bail them out. Maybe if we let the banks that facilitated this fraud go under it would be a dire warning to the surviving institutions to mind the till.
“had got” should’ve read “hadn’t got”
Pardon my ignorance, but can someone break down the transactions and explain the fraud. Looking at the numbers something doesn’t make sense, but I don’t know enough about the process. Appreciate it.
Party A buys house and lot next door. Fixes it up, puts it on market for double what he bought it for. No sale…. no sale….. no sale….
Arranges with Party B to sell it for “1.1 milion.” In quotes, because it really sold for $999,999 plus the seller’s own financing to make up the difference. Bank gives a million dollar loan to Party B.
Party B never makes a payment (guessing, given the prompt lis pendens). Party A and Party B split the 500,000 proceeds from the Bank’s loan (half of which went to pay off Party A’s original mortgage). Win/win for Parties A and B. Bank (and now you, the taxpayer, via TARP) are screwed out of $500K.
The end.
“explain the fraud”
2006 buyer pays $530k in a (possibly) legitimate arms-length purchase (I’ll give benefit of the doubt on it). Purchase includes neighboring vacant lot.
2006 buyer sells in May 2008 for 15% over list. Provides “down payment” financing. 2008 buyer gets $1M loan. 2006 buyer makes $470k profit, likely pays 2008 buyer ~$50k+ for the foreclosure to come. May 2006 Buyer still owns vacant lot.
Bank gets house that was worth $530k at peak of market when combined with vacant lot. House worth (max?) $400k now. Bank loses $600k, fraudsters make $470k cash and own a vacant lot–so up about $550k.
If May 2006 Buyer put any money into reno of House, deduct that from profit, and reduce bank’s lose by ~40% of what May 2006 Buyer spent.
Oh, not really the end: 1) maybe some dummy will actually buy it for 1.29 million (not likely), and 2) maybe the start the party all over again by developing the vacant lot next door.
Very strange. I wonder if some significant work was done along the way. If it was pure fraud then why would the last 2 sellers be so determined to get $1 MM+ for the place?
As for the olympics…Intrade gives it about a 50% chance but even if they came to Chicago I’m with you folks. Not sure it’s a plus…unless the development results in a general revitalization of that area.
What anon (tfo) said.
Gary, first best option is to find a sucker to sell it to legitimately. But barring that, stealing $500K and splitting it is a nice worst-case scenario.
“why would the last 2 sellers be so determined to get $1 MM+ for the place”
I dunno, maybe b/c whichever mortgage broker they were working with said that the UW was easier if you don’t need a loan over $1mm, or that the comps wouldn’t support a value over $1.2mm. Has the benefit of being mostly true. I’m sure they would have tried for $2mm, had it been remotely possible.
Would someone please explain how the Olympics will drive property values higher? Sure, you can rent out apartments/rooms for a couple of months before and during the games, but then what? There would be a lot of rent money to be made during this time but when you compare it to the long-term purchase and holding costs of property, it suddenly doesn’t look so big.
Okay lets kick off our fundraising for the Eastern European mafia/Mortgage Fraud 101 seminar.
1) Oleg Lithuania gets a big no-doc, 100+% LTV loan to buy this place in 2006 for 530k. Oleg, being an illegal immigrant from Eastern Europe with few legal marketable job skills, but much street smarts and mob connections, decides he is going to be a mini Trump. He gets a 105% LTV loan covering his entire purchase and closing costs on the loan.
2) After claiming to sink some money into it, and inviting his similarly connected appraiser friend, Igor Ukraine over to appraise the property after a year or two, Igor uses some newfangled formula or ridiculous comps to come up with a 1.2MM figure after two years.
3) Oleg then decides to put the property up for sale. And surprise, surprise! Within a few days an interested buyer comes along, lets call her Natasha Latvia. She is also similarly well connected and is able to get no doc 100+% LTV loans. But Natasha never makes more than a few payments on her new dream home, if even one at all.
4) So Oleg walks with 1.15MM – 530k mortgage lien = 620k in cash. Natasha never makes a payment and defaults and disappears on a boat back to the old country and Igor claims ignorance/being a victim or disappears as well. Under the table profit to each: 207k. Oleg might disappear if he sees the authorities closing in on him and the gig is up, but while this boom was going on he was the mastermind and would continue this cycle ad infinitum (with Igor’s flexible appraisal valuations). Natasha was happy to help him with this transaction as she got a juicy cut as well, and will be instructed to find a friend to come visit the states to be the next actor. The bank is left holding the defaulted inflated mortgage of 1.15MM and Igor buys a yacht and does a champagne toast to the blessed land that is America!
Meh sorry it would be Oleg with the yacht, but maybe Igor could get one too depending on how they split the proceeds.
I know all the ins and outs of RE fraud; I’ve seen a lot of it. The scammers come up with a new one everyday. The newest one is the scammers claim to be a property management company. They offer to assist the wanna-be land barons manage their properties. Of course they ask for an assignment of rent….you can see where this is going. The management company collects, keeps and spends the rent while the building goes into foreclosure, screwing the property owner and the tenant. Some wannabe land barons are so desperate they’ll do anything to unload these properties on to someone who says they’ll take care of it.
Everyone provided great explanations! Makes me start to wonder how many were in on the 100% LTV no doc loans….
this stuff is unbelievable. and it makes it even more bizzare that no-down payment loans existed in the first place, but thats old news. thanks for the info guys.
Bob, there are plenty of good ol’ American fraudsters, so no need to gratuitously appeal to the anti-Eastern European tendency that pops its ugly head up around here from time to time. Or do you have evidence that these transactions were conducted among Eastern Europeans?
There is definitely something weird. I remember seeing this on the Seller’s website (http://www.olympic-opportunity.com/pictures.html) a long time ago. I don’t know how much work they did, but I’m guessing it was a fair bit. Maybe not enough to make a $1M house in that neighborhood.
KW,
The names I’ve seen on many of these mini land barons are indeed eastern european (and no I’m not talking Chicago polish either). Not that it is their exclusive realm but it seems much more widespread there that I suspect the E Euro mafia got wind of the scheme and rolled out fraud franchisees towards the end of the bubble.
Just look at the latest sales on the Tribune’s site for a lot of S Loop buildings for any indication. Curiously enough many of these buildings are indeed mostly vacant/dark on weeknights.
Yes there were some home-grown American fraudsters too, surely. But at least there is a much greater chance of recovery for the bank/taxpayers. Why were the banks giving out large loans with little to no documentation to people of questionable status where there is no recourse whatsoever?
Great how to information on the fraud. The thing I find weird though is that the fraudulent buyer is now trying to sell for a profit. If it was really fraud they would have just walked away, right? Or they wouldn’t care what they sell it for.
“Would someone please explain how the Olympics will drive property values higher? Sure, you can rent out apartments/rooms for a couple of months before and during the games, but then what? There would be a lot of rent money to be made during this time but when you compare it to the long-term purchase and holding costs of property, it suddenly doesn’t look so big.”
Pete,
I’m with you. I don’t get it either unless, like I said above, the belief is that there will be a general revitalization of the area. That is possible though. The biggest drawback of that part of town is the empty lots and the boarded up storefronts and buildings. Fix those and the area would be awesome. But it will take something huge to drive that.
Are there any sites similar to crib chatter in atlanta. Love this site and will be moving there soon. thanks!
My opinion is that the market correction not only created accidental landlords, but accidental fraudsters, as well.
Some stuck flippers and new home spec builders became fraudsters as a last resort.
No greater fool remained except the banks.
“Would someone please explain how the Olympics will drive property values higher? Sure, you can rent out apartments/rooms for a couple of months before and during the games, but then what? There would be a lot of rent money to be made during this time but when you compare it to the long-term purchase and holding costs of property, it suddenly doesn’t look so big.”
Its the revitalization. You have to walk through this neighborhood from Green Line to get from downtown to Washington Park. Even if they have to erect a Hollywood neibhorhood (all facades) there is no way they will leave the neighborhood they way it is now.
this is gorgeous! so much character remains! and king drive is beautiful – for miles – on the southside . . . really beautiful. thank god they’ve somehow managed to survive! truly beautiful.
If you look at the google earth image, there is not much to the west of this house, you could buy it up and have an inner city country estate. I can’t really imagine the Olympics really having that much of an effect, even with Obama, with the current economic climate. What’s left of the vintage housing stock around here is great, the apartments built around here were the highest end, top of the line of their day.
And the games look like they have just gotten even more unlikelier with this AM’s news about Blowdryavitch – assuming it sticks.
“the games look like they have just gotten even more unlikelier with this AM’s news about Blowdryavitch”
More likely, is more likely. Blago was an impediment re Olympics, I think. So that’s the only downside I see.
Attention Brokers: Making people “register on your site” to merely look at listings is LAME.
I agree. It used to be that that was the only way to see all the listings (a dumb and complex MLS rule I won’t get into). However, now you can see around 98% of the listings without registering. So realtors can no longer use that as an excuse.
I wonder if the real estate companies, news sites and other website owners which have mandatory registration ever take a look at the data that comes in. I would think that after seeing names like “Heywood Jablowme” for the 100th time they’d realize you can’t exactly compel someone on the web to tell you anything about themselves if they don’t want to.
re: real estate website registration is LAME
I think the practice or requiring people to register harkens back to the early days of online listings, and the “great fear” among brokers that other brokers would snag listings, snag clients, etc.
But in the current market, requiring “mere lookers” to register just irritates the best would-be clients, and it scares away people who have no immediate interest but could have interest at a later time.
I used to work as a broker, and one thing I know is that the best clients NEVER give out personal information. Ditto for the best future leads. And when it comes to future leads, many times a property sale originates from a non-interested 3rd party telling 20 of their friends that the house down the block is for sale. This is much less likely to happen if currently disinterested 3rd party and/or the neighbor can’t simply take a quick look.
There’s simply too much property on the market right now, and if a would-be buyer can’t simply look at a property, they’re onto something else in seconds. (“OH WELL I can’t see info on 5228 S. King; I’ll just look at the 500 other similar properties for sale.”)
I also think that “the great fear” that used to exist with brokers has flipped to the side of the would be clients, as fewer and fewer people are willing to register personal information on 500 different websites (for reasons I already mentioned).
AND PETE IS ABSOLUTELY ONTO SOMETHING when he wonders if these companies actually study their internet metrics. There are in fact entire sectors of the advertising industry devoted to studying internet browsing patterns. The smart companies study whether or not their banner ad clicks materialize into immediate sales, eventual sales, no sales at all, or even just market exposure.
But it doesn’t appear as if the real estate brokerage companies are studying how many people simply ditch their websites when they’re required to register. I know I’m not alone when I just ditch these websites. Maybe I’ll find out about the property by way of another website… …or maybe I’ll just go feed the cat and post stupid comments on my friend’s Facebook page. Either way, I’m no longer a potential lead, and neither are 5,000 other people who bail on the same site.