Property Flipping Robbing Homeowners

 

 

Margaret Wragg thought she was getting her dream home. But what she got was a heartache from trying to keep up with the dream that she never could have afforded in the first place.

 

Property Flipping Robbing Homeowners

 

By Josh Barbanel
New York Times Staff Writer
Pub: October 17, 2004

Margaret Wragg, a retired school aide, found the home of her dreams on Martense Court, a quiet cul-de-sac just a block from a teeming stretch of Flatbush Avenue in Brooklyn.

It was a classic brick attached house, two stories tall and 18 feet wide, with a front porch with an iron railing, a backyard and even a few surviving original details, like dark wood, patches of decorative plaster work and stained glass.

She bought the house even though she hadn't originally set out to be an owner. She had lived in the same apartment for 25 years on Church Avenue, a few blocks away, and when her landlord told her she would have to move out because he was selling the building, she wanted to rent again.

But looking at the classified ads, her eyes drifted to an advertisement offering "the home of your dreams," and she began her journey to home ownership.

Now, two years later, she says that dream has turned into something else — endless stress, heartache and sleepless nights — as she experiences the dark side of the real estate boom in America.

Her life savings have been depleted, she now says in a lawsuit, by a house she could never afford, appraised at far more than it was worth, with two mortgages she should never have qualified for, with carrying costs more than double her income.

She worries about whether to pay the utility bill or pay for necessities. She has a stack of packing cartons in case she has to move out.

She blames the mortgage company, the appraiser, the lawyer who represented her, and United Homes L.L.C., of Briarwood, Queens, the company that owned the home, placed the ad, and arranged almost everything about the closing.

"I trusted them, because I had never done this before and I didn't know any better," she said bitterly, as she sat in an overstuffed chair in her living room.

In a federal lawsuit, Ms. Wragg says she was the victim of fraud and racial discrimination in a classic case of what's known as housing "flipping."

Her opponents say that she was treated fairly and is blaming them for her mistakes, including taking a mortgage she could not afford.

It is, in short, a case study in what many housing experts say is an increase in complaints of housing fraud, abusive and predatory lending practices, phony appraisals and even outright thefts of deeds, as home prices have soared and interest rates have fallen.

Although it has not been determined whether there was fraud or other wrongdoing in her case, higher home prices make any house fraud more lucrative, because there is more money involved, and the booming market provides homeowners with more equity that can be stripped away through predatory lending schemes, often in poor and minority neighborhoods where homeowners and first-time purchasers may be too trusting and uninformed.