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‘Frustrating’ backlog in Dayton’s home fixer-upper program

The city of Dayton’s Lot Links program has a large backlog of applications and has transferred just 38 properties this year, partly because of paperwork issues, city officials said.

Last year, about 148 properties were transferred through Lot Links, which allows residents to pay a couple thousand dollars to acquire abandoned and tax-delinquent properties to fix-up or improve after the back taxes are wiped away.

RELATED: 1,000 and counting: Dayton’s home fixer-upper program grows

But the number of properties transferred through the program dropped dramatically this year, which coincided with the Montgomery County Prosecutor’s Office decision to stop handling title searches.

Currently, about 300 to 400 applications are in the system, and applicants are having to wait 18 to 24 months to get ownership of the properties, said Brian Inderrieden, acting director of Dayton’s department of planning and community development.

But, Inderrieden said, the number of transfers should increase next year because the city changed the application screening process and hired experts to handle title research services.

Dayton Mayor Nan Whaley said citizens generally rave about the program, but some have expressed frustration with the lengthy wait times to get the properties they want.

“I think we have work to do obviously, since we only transferred 38 properties this year,” she said. “But we only control a short part of the process, which is part of the challenge.”

RELATED: City program takes heat as homes stay vacant

Lot Links is a partnership between the city of Dayton and Montgomery County that is aimed at returning abandoned and tax-delinquent properties to productive uses.

Applicants request abandoned properties, and if eligible, the city asks the county to initiate the tax foreclosure process.

When the foreclosure is complete, the county removes the back taxes and the city takes possession of the property, which it transfers to the applicants. The city collects foreclosure fees from applicants that usually run $2,000 to $2,500.

Since the program’s inception in 2008, the city has transferred ownership of roughly 1,000 vacant, tax-delinquent properties to private owners, city leaders said.

But Lot Links applicants have voiced impatience with the turnaround time. Lot Links received 239 applications for properties this year and 358 in 2016.

City officials in the past estimated that the process takes around 16 months to complete. But wait times right now can be up to two years. Officials said realistically they would like transfers to take between 12 to 18 months.

Whaley said she would like to see more urgency — particularly on the county’s end — to get the properties processed and into the hands of applicants so they can be returned to productive use.

“Citizens come to me and say ‘We love the Lot Links program — it’s a great program — but I just wish it was faster,’” Whaley said.

Greg Soete bought a home on Drummer Avenue in March 2016. Several months later, the 48-year-old requested two empty lots next door through the Lot Links program to turn into a side yard and garden.

Soete is still waiting for the properties to be transferred. He was told it could take two years.

“It’s an awful lengthy time, and if you’ve showed the interest and paid the money upfront, you’d think the process could go a little bit faster,” he said.

RELATED: Thousands of vacant Dayton lots available

For years, the Montgomery County Prosecutor’s Office performed the abstract work for foreclosure filings, which includes title research on the defendants to identify the right parties to name in the foreclosure complaints, said Mary Montgomery, chief of the prosecutor’s civil division.

But the prosecutor’s office did this investigative background work as a courtesy, she said, while elsewhere in Ohio, cities, townships and land banks that request foreclosure complaints are responsible for doing the background work.

Because of the sheer volume of foreclosure cases requested by multiple jurisdictions, the investigative title work became too burdensome for the prosecutor’s office to continue handling, Montgomery said.

“We are not funded to have the manpower necessary to do that abstract work,” she said. “It’s not legal work — we are only required to do the legal work.”

As a result, the city of Dayton earlier this year authorized spending $200,000 to pay two title agencies to take care of the upfront title research services.

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Planned auctions of foreclosed property in Greece delayed

Public notaries in Greece’s capital of Athens have called off auctions of foreclosed properties, citing disruptions from security measures for a visit by Turkish President Recep Tayyip Erdogan.

The association of Athens notaries said Tuesday that traffic restrictions and other police measures for Erdogan’s visit could prevent notaries reaching the courts on time.

The foreclosure auctions resumed last week after a months-long suspension, and then stopped again after protesters clashed with police in an Athens court. Wednesday’s auctions would have been the first since then.

Erdogan is due in Athens on Thursday.

Greece’s left-led government had pledged to provide adequate police protection to stop protesters from disrupting auctions of foreclosed property. The sales are a key part of Greece’s efforts, under its international bailout program, to boost its bad loan-plagued banks.

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Lender buys land surrounding Padre Island Schlitterbahn park in foreclosure auction



Austin lender Axys Capital Credit Fund took over ownership of 270 acres surrounding Schlitterbahn’s water park and resort on North Padre Island Tuesday after no one else bid on the land at a foreclosure auction in Nueces County, according to an Axys lawyer.

Eric Taube, Axys’ attorney, couldn’t immediately say how much his client bid for the land. He had said on Monday that the lender intended to bid the amount it’s owed — more than $18 million — by the development partnership.

An involuntary bankruptcy was filed against the partnership, New Braunfels-based Upper Padre Partners, in May to stop Axys from foreclosing. Last week, however, Axys received approval from a bankruptcy judge to proceed with the foreclosure.

Asked what Axys’ plans for the land are, Taube said he didn’t know.

“We’re obviously talking to a number of different people in the area. “We’re going to be talking with the city.” Axys also is in discussions with IBC Bank, a lender on some of the other property around the park, the bankruptcy trustee and some other parties.

Axys now becomes a “fairly significant” unsecured creditor in the bankruptcy, though Taube noted it has personal guarantees from some of Upper Padre Partners’ principals that it intends to pursue. Partners in the venture include principals in Schlitterbahn Waterparks and Resorts principals.

Separately, the Schlitterbahn water park and 92-room hotel on North Padre Island could be headed to the auction block in February if a deal for the property can’t be reached before Jan 31.

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Planned auctions of foreclosed property in Greece delayed

ATHENS, Greece — Public notaries in Greece’s capital of Athens have called off auctions of foreclosed properties, citing disruptions from security measures for a visit by Turkish President Recep Tayyip Erdogan.

The association of Athens notaries said Tuesday that traffic restrictions and other police measures for Erdogan’s visit could prevent notaries reaching the courts on time.

The foreclosure auctions resumed last week after a months-long suspension, and then stopped again after protesters clashed with police in an Athens court. Wednesday’s auctions would have been the first since then.

Erdogan is due in Athens on Thursday.

Greece’s left-led government had pledged to provide adequate police protection to stop protesters from disrupting auctions of foreclosed property. The sales are a key part of Greece’s efforts, under its international bailout program, to boost its bad loan-plagued banks.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Fake South Florida Foreclosure Law Firm Operators Sentenced to 5 Years

Acting U.S. Attorney Benjamin G. Greenberg.

U.S. Senior District Judge James I. Cohn sentenced two men charged with running fake foreclosure defense firms to 63 months in prison for conspiracy to commit wire fraud.

The Fort Lauderdale judge handed down the sentences against Lake Worth resident Joseph Hilton, also known as Joseph Yurkin and Joseph Starr, 57, and Adam Forman, 48, of Coconut Creek. Cohn also ordered Hilton to pay $1.4 million in restitution and forfeit $1.4 million, and set a $600,000 forfeiture for Forman.

Prosecutors from the office of Acting U.S. Attorney Benjamin G. Greenberg built a case alleging the men ran companies “purporting to be law firms, legal referral firms, or providers of support services to law firms,” offering foreclosure defense representation in the wake of the housing market collapse.

From about September 2013 to August 2016, Hilton and Forman were accused of contacting homeowners and offering legal assistance, mortgage modifications and counsel to help stave off foreclosure.

The two men operated Liberty Law Group P.A. and Business Administration Growth LLC in Boca Raton, Legal Referral Services of Florida II LLC in West Palm Beach, and seven Coral Springs firms: Galler Lehman Law, Consumer Legal Advocates lnc., Consumer Legal Advocates II LLC,  Asset Protection Law Firm, Asset Protection Law Group, Oracle Marketing Co. and Consumer Legal Resources of Florida LLC.

Prosecutors charged they told clients that the businesses were law firms with licensed and skilled defense attorneys, who could negotiate on behalf of homeowner to reduce principal, cut monthly payments, stop foreclosure proceedings and help mortgagees hold onto their real estate.

They claimed to be a network of 100 attorneys, used the word “law” in their company names, described themselves as consumer advocates and promised vigorous representation for homeowners on the brink of foreclosure.

The federal prison sentence in just the latest blow for Hilton and Forman.

In August, Florida Attorney General Pam Bondi filed suit in Palm Beach Circuit Court, alleging the men, their companies and other principals posed as lawyers to prey on vulnerable clients and dupe young attorneys into serving as front men for fraudulent operations.

Bondi’s suit named 20 defendants, including Victor Spagnuolo, Wendy Anne Hart, Barbara Rudolph, Wayne Lucas and their companies.

None of the defendants are licensed to practice law in Florida, but prosecutors say they used the names of legitimate attorneys on corporate documents and court filings. None responded to Bondi’s suit by deadline, prompting Palm Beach Circuit Judge David E. French to enter default judgments against the corporate and individual defendants from September 2016 to January 2017.

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Prescription gaming, the ignored war, and eight other stories you might have missed

1. Games without frontiers

Neuroplasticity refers to the idea that your brain synapses and pathways can be altered by your environment or experiences. The most obvious examples are cases where a person suffers a major trauma that changes them (for example, PTSD). But what if experiences and environment can also change one’s brain for the better? That’s the idea behind Akili Interactive Labs’ video game that is getting very to close to becoming the first FDA-approved prescription video game. “In a study of 348 children between the ages of 8 and 12 diagnosed with ADHD, those who played Akili’s action-packed game on a tablet over four weeks saw statistically significant improvements on metrics of attention and inhibitory control.”

+ NPR: Tylenol May Help Ease The Pain Of Hurt Feelings.

2. Don’t call it a comeback

The Atlantic’s Alana Semuels with a very interesting look at The Never-Ending Foreclosure: “Despite ever-sunnier economic conditions overall, the Great Recession is still rattling American families … How can the country survive the next economic crash if millions of families still haven’t recovered from the last one?” (Increasingly, DC’s answer to that question is: “We don’t care.”)

+ Sen. Chuck Grassley on the the Senate tax plan passed in the middle of the night (with handwritten notes still in the margin): “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.” (I can’t figure out if he means that things like money and booze are bad, or just that they’re too expensive…)

+ Five social experiments buried in the Senate tax bill.

3. This is the trend my friend

“So, I want them to stop sending dependents, and I think it’s now time to start moving American dependents out of South Korea.” Lindsay Graham is suggesting that military families should leave South Korea as threat of war grows.

+ Reuters: “South Korea and the United States launched their largest-ever joint aerial drills on Monday.”

+ “Inexplicably to me, we’re recreating the geopolitical hostility of the Cold War, and we’re rebuilding the nuclear dangers … I believe that the likelihood of some sort of a nuclear catastrophe today is actually greater than it was during the Cold War.” Former Defense Secretary William Perry gave a speech that is not likely to make you feel any safer.

4. Fortunate none

“Yemen lost the title of Arabia Felix, or Fortunate Arabia, long ago. It has suffered civil wars, tribalism, jihadist violence and appalling poverty. But none of this compares with the misery being inflicted on the country today by the war between a Saudi-led coalition and the Houthis, a Shia militia backed by Iran.” The Economist on the war the world ignores.

+ Ali Abdullah Saleh, Yemen’s former dictator, was killed outside the capital Sana’a. “His death is likely to escalate a three-year civil war that has laid waste to the country. It was also a microcosm of Yemen’s complexity: Mr Saleh was killed by former foes who had become allies, only to become enemies again.”

5. Lawyers in gov

There is a ton of political news today, so we’ll squeeze most of it into this one section which you can read or skip depending on your neck’s tolerance for pain (you’re going to be shaking your head in disgust a lot). Here’s a quick catch-up on the weekend following the Flynn plea deal (which gave new meaning to the phrase, that escalated quickly): president Trump published a tweet in which he implicated himself in the obstruction of justice case. Trump’s team then said his lawyer wrote that tweet. And then that lawyer told Axios a president cannot obstruct justice. (As we know by now, the only people who can commit crimes are black athletes, brown immigrants, and Hillary Clinton.)

+ Here’s an excellent overview of what the Flynn deal means. NYT: 10 Key Takeaways.

+ Jeffrey Toobin: Michael Flynn’s Guilty Plea Sends Donald Trump’s Lawyers Scrambling.

+ “Often listening in is the special counsel himself, a sphinx-like presence who sits quietly along the wall for portions of key interviews.” WaPo: Inside the secretive nerve center of the Mueller investigation.

+ “We need Republican Roy Moore to win in Alabama.” Trump explicitly backs Roy Moore.

+ The Supreme Court lets Trump Travel ban take full effect.

+ Trump rolls back federal protections on Utah lands. “With typical Trumpian flair, the president had hyped the announcement as ‘one of the great, really, events in this country in a long time.’” (Here are some photos of the Bears Ears National Monument.)

+ Even in an era when sycophants say ridiculous and embarrassing things on a regular basis, this stands out. CIA director: Trump tweets yielding valuable intelligence.

6. Freeze frame

It has been a year filled with an overwhelming amount of often overwhelming news. That’s reflected in the InFocus collection of the Top 25 News Photos of 2017.

7. Rehab

“They are required to say they’re unemployed and turn over their food stamps to the program, which state regulators say is fraud. And on their days off, some worked for free mowing Landrith’s lawn and doing yard work around his property.” Reveal with their latest piece on rehab programs “that promise defendants freedom from addiction but instead turn them into indentured servants for private industry.” Inside a judge’s rehab: Unpaid work at a local Coca-Cola plant.

8. The new pollution

“Power plants have been the biggest source of U.S. CO2 emissions since the 1970s—until now.” Congratulations to planes, trains, and automobiles for becoming the new leader in greenhouse gas pollution. But “the big reversal didn’t happen because transportation emissions have been increasing…”

+ “For decades, certain scientists have hoped carbon-capture technologies, deployed at large scales, could save humanity from catastrophic climate change by providing a bridge to a future in which we’ll have enough capacity to create, store, and supply all the world’s energy from only renewable sources.” Can carbon dioxide capturing technologies save us?

9. Paying forever in blue jeans

“Affirm loans don’t just allow but entice you to buy something you can’t afford in one lump sum. But the loans aren’t Affirm’s real product — they’re a means to building and perfecting a new underwriting system to determine consumer creditworthiness, powered by machine learning and your personal data.” Racked: Would You Take Out a Loan for a Pair of Jeans?

10. Bell bottom news

“There are no ads in Messenger Kids and your child’s information isn’t used for ads. It is free to download and there are no in-app purchases.” Facebook is launching a version of Messenger for kids, proving once and for all that life begins at FB’s conception of you as a customer.

+ Vice: “Having a shitty Monday? Hey, at least you haven’t been attacked by a bear, made a lucky escape from that bear, and then once again been attacked by that same bear.” (I read 75 tabs worth of news on my Monday. So we’ll call it a tie.)

+ “After the implosion charges went off, nothing happened.” The attempted implosion of Pontiac Silverdome failed spectacularly. (They should try whatever techniques are being used in Washington, DC. The implosion there is working like a charm.)

Quartz now syndicates NextDraft, a daily roundup for the day’s most fascinating news curated by Dave Pell. Read the archive here. Sign up to get the newsletter or download the app here.

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As ‘fixed’ loans spiraled, tens of thousands were forced from their homes

TIJUANA, Mexico — The eviction squads arrive in convoys, whisking attorneys, police officers, bank agents and teams of movers through the gates of the Canadas del Florido housing development.

They eject the residents, seal the front doors with bricks and post signs warning against break-ins. Abandoned units blight every block of this 2,000-home community. Squatters ignore the signs and take over, their flickering candles casting an eerie glow at night.

Maria De Jesus Silva’s turn came on a spring day in 2014, when she found a thick stack of foreclosure documents on her doorstep.

According to the documents, the Bank of New York Mellon, acting as trustee on behalf of bondholders, had started the long legal process to evict Silva from the two-bedroom home she bought in 2006 and shared with her daughter, son-in-law and granddaughter.

“I was shocked because New York Mellon is a very powerful bank, and I’m a very poor person,” said Silva, who makes $225 a month working at a gas station. She has hired a lawyer to try to block her eviction.

One of the harsher aftershocks of Mexico’s housing collapse came from subprime-like mortgages given to the working poor, people who didn’t qualify for loans from Infonavit, Mexico’s giant housing finance agency.

Both types of loans featured rising monthly payments, and the total amount owed also increased. But the subprime loans were structured to increase at a higher rate.

For investors, those escalating payments provided a hedge against inflation and currency fluctuations. But for homeowners, the onerous loan terms led to defaults on a massive scale.

Ten years later, a cyclone of foreclosures continues to cut a slow-motion path of financial destruction across Mexico. It’s the latest stage of a housing collapse that left developments plagued with infrastructure problems and abandoned homes. Now banks and bondholders are extending their reach into the decaying tracts to seize homes.

In Silva’s neighborhood in eastern Tijuana, mailboxes are stuffed with foreclosure notices. Cul-de-sac gates are locked in mostly vain attempts to keep out eviction crews. “Is the bank trying to take away your home?” reads a sign with a phone number to call, nailed to a teetering utility pole.

Silva’s mortgage came through Su Casita, a Mexican lender that received funding from an arm of the World Bank called the International Finance Corp., whose motto is “Reducing Poverty. Improving Lives.”

She delivered her payments in person, but after six years the burden became too great. The monthly payment had increased 32 percent. The amount she owed had ballooned 20 percent, to the equivalent of about $18,000 at the time.

She stopped paying, triggering foreclosure proceedings.

Silva said the builder and lenders “deceived us into buying these homes, and everybody left, or is waiting to be kicked out.”

The Bank of New York Mellon, which declined to comment, sold off its Mexican banking subsidiary in 2014.

■ ■ ■

The subprime loans that led to the U.S. housing market collapse a decade ago had some guardrails against skyrocketing payments, including lifetime caps on interest rate increases; these Mexican loans had none.

The loans were offered by Mexican construction companies, banks and mortgage brokers — some backed by the World Bank, others by U.S.-based companies that had played a role in the American mortgage crisis.

Later, the loans in Mexico were pooled into mortgage-backed securities by Wall Street investment banks and sold to bondholders. Income from the bonds came from the mortgage payments made by home buyers. Once homeowners started falling behind on the payments, default rates skyrocketed and the bondholders launched massive foreclosure actions.

Financial institutions and the Mexican government promoted the so-called social interest loans as a means of extending homeownership to the taco cart vendors, swap meet peddlers, beauticians, house cleaners and others who scrape by in Mexico’s huge underground economy. They comprised about 10 percent of the mortgage market.

Buyers were assured that mortgage payments would remain stable. They were given amortization tables showing monthly payments and interest rates as fixed for 25 or 30 years.

But the tables omitted a key factor: those payments were tied to an index called unidades de inversion, or units of investment — UDIs for short — which tracks the Mexican Consumer Price index.

Each monthly installment was determined by multiplying the “fixed” amount due by the UDI rate, which grew slightly every month.

Between 2000 and 2010, those relentless monthly upticks mounted: The UDI rate surged about 70 percent. And as the payments increased monthly, so did the total amount owed.

Financial analysts hired by debtor groups found that homeowners would have to pay the amount of the original loan up to seven times over to pay it off entirely over 30 years.

■ ■ ■

Roberto Ramos, a former salesman for Homex, once Mexico’s largest homebuilder, sensed trouble about two years after people purchased homes. Some buyers at the El Laurel development in Tijuana wouldn’t wave hello to him anymore. Others shot him dirty looks.

“They’d stop by the sales office and tell me they couldn’t afford their homes anymore,” Ramos said. “They would say, ‘Either I feed my family, or I pay the mortgage.’”

Salespeople typically helped buyers with their loan applications, and were responsible for ensuring that borrowers understood the loan terms. But that wasn’t possible, Ramos said, because even he didn’t understand them.

At training sessions, supervisors glossed over the loan details and told salespeople to downplay the risks, he said. Borrowers with loans from Su Casita, for example, received a pamphlet that minimized the financial perils.

“The social interest loan is provided on very accessible terms,” the pamphlet read. “In the long run it represents an important saving and a magnificent investment.”

Ramos, who made hundreds of loans, many of which ended up in foreclosure, said he eventually stopped steering borrowers to the financial instruments. “I thought I was helping people,” he said. “Instead I was killing their dreams.”

■ ■ ■

A large source of funding for the UDI loans came from the World Bank and the Inter-American Development Bank, which provided about $3 billion to Mexico’s social development bank, the Federal Mortgage Society. The bank in turn funneled the money to mortgage lenders who made home loans.

Banks and mortgage lenders made about 850,000 loans from 2000 to 2013, most of them in UDIs, according to analyst estimates and Mexican government statistics. Analysts gave the strong ratings based on the assumptions that borrowers’ salaries would keep pace with inflation, housing values would increase and loans were made to credit-worthy borrowers.

Instead, wages often remained stagnant, housing values dropped or stayed flat, and many loans were made to people who couldn’t afford them. Mortgage fraud and lax lending standards, as in the U.S., also played a role in the meltdown.

A 2008 internal report by the Federal Mortgage Society cited fabrication of documents and collusion between builders and mortgage lenders as factors in the sharp rise in defaults. Large construction companies, including Homex, were making sales without regard to borrowers’ long-term ability to pay, the report said.

The Mexican loan pipeline was hailed at a 2007 finance industry gala at the Ritz-Carlton in New York City. Credit Suisse won the “deal of the year award” for underwriting 1,876 UDI loans originated and underwritten by Su Casita and GMAC Financiera, the General Motors-affiliated financial services company. By 2016, the default rate on the “deal of the year” loan portfolio had reached 80 percent, according to Standard Poors.

Mortgage lender after mortgage lender, burdened by bad loans, went bankrupt. There were so many defaults that some lenders formed mortgage servicing companies to handle the bad loans their own industry had created.

An executive for one firm, Patrimonio, touted his approach at a finance conference in Miami in 2011. “The region’s high yield, stressed and distressed deals — turning ticking time bombs into opportunity,” was the title of his PowerPoint presentation.

The executive, Ignacio Farias, in a phone interview, said the “ticking time bombs” weren’t caused by mortgage brokers like him, but by the government, which devised the UDI loans and failed to offer loan modifications when borrowers ran into trouble.

Mark Zaltzman, the former director of Su Casita, said his company did its best to weed out fraudulent loan applications submitted by construction companies.

“It’s not so much that the product was badly designed. It was just a very bad handling of the situation after the downturn of the economy,” Zaltzman said. “This was the manner to reach out and provide affordable housing to an under-served population in the lowest income bracket.”

But others blame the mortgage lenders and construction companies for eroding underwriting standards in pursuit of profits.

Mario Novelo, the Federal Mortgage Society’s director general of finance, said lenders and construction companies in large part caused the crisis because they made loans to unqualified buyers and passed the risk on to others. There was no government oversight, and the industry took advantage, he said.

“The only thing construction companies cared about was getting people into houses. They didn’t care if borrowers could pay or not,” Novelo said in an interview.

The Federal Mortgage Society stopped funding UDI loans in 2013.


The World Bank declined repeated requests for an interview. In a statement, the bank said, “Similar to the experience in the U.S., the 2008 financial crisis restricted available financing for Mexico’s housing lenders and exposed poor credit practices in the home-loan industry.”


Silva, the gas station attendant, used to hand-deliver her mortgage payment at her lenders’ storefront office. Her two-bedroom row home, built by Homex, was cramped, the ceiling leaked and pipes burst regularly, but it was still better than paying rent.

She paid 328,000 pesos (about $27,000 under the 2006 exchange rate), financing the purchase through a 25-year UDI loan and a smaller government loan.

Silva, who said the UDI loans were never explained to her, stayed current for several years. But by 2011, her monthly payment nearly equaled her monthly salary.

Since then, she has worried constantly about eviction. Outside, the crime-ridden neighborhood continues to deteriorate, its streets blighted with bonfires, garbage piles and busted mailboxes stuffed with foreclosure notices. “Every day,” Silva said, “I’m afraid they’ll coming knocking on my door.”

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City’s longest-unfinished house may get fixed

They’re popping the corks on Harding Way, where an eyesore of a house under construction for a mind-boggling 22 years finally may be completed.

Officials recently started legal action to finish the perennially-in-progress two-story structure at 745 W. Harding Way.

“I wanted to do this eight years ago,” said Pete Lemos, head of the city’s Neighborhood Services Division.

The neighbors wanted it done two decades ago. To them the house is a property-value-lowering blot on the area tolerated far too long by feckless city officials.

“Everything about that house drives me insane,” neighbor Kerry Krueger said.

Krueger and her neighbors say the late owner’s relatives took a tidy, one-story cottage and bloated it with Winchester Mystery House-type perpetual expansion.

“They come and go, and just keep building and building and adding and adding,” neighbor Anne Sheldon said.

But the additions often are amateurish and ugly, neighbors complain. Lines aren’t plumb, Susan Canlis said. “It drives me crazy. It’s caddywampus.”

“It looks like a scary mansion at night,” Frank Brand said.

Worse, the on-again, off-again work is mostly off-again, neighbor say. Scabrous patches of plyboard remain unstuccoed. Roofing material remains stacked up top. Columns one neighbor calls “bulbous things” remain unpainted.

And so on.

“I’ve lived there 20 years and I saw one to two months of work in which they made it worse,” Krueger fumed.

Though the house has been a code-violation factory, a trouble magnet and a source of peevish neighborhood complaint, it exerts a near-magical power to flummox city officials.

For one thing, owner Carmen Cortes died intestate. Possibly because her house racked up more than $100,000 in code violations and back taxes, no family member would take it.

For another, the city can’t ID the lender. This seems unbelievable, but during the mortgage boom lenders cranked out paperwork without due diligence. And during the bust many lenders went under. Records remain disarrayed.

“They call it the foreclosure crisis for a reason,” Lemos said.

Cortes’ daughter-in-law, Norma Cortes, has long said she and her family will fix their “dream house.” But she hasn’t, and the city can’t force her.

Neighbors grumble the family is playing the city, making hollow promises and wangling extensions by applying for building permits, which come with six-month timelines. A charge Norma Cortes denies.

After I wrote about the house in 2015, the family parked a car out front, neighbors say. Neighbors believe it was a ruse to make the house look occupied.

Nobody ever moved in, said Kreuger. “The car had cobwebs,” she said.

Norma Cortes said she is being treated unfairly.

Cortes says she sends someone every day to tidy the yard and paint over graffiti. She said she is the victim of Gladys Kravitz neighbors and an incompetent city bureaucracy.

“It takes time,” Cortes said.

Yes, but … 22 years? Tortoises and Ents get things done faster.

“My husband is doing it. It’s not like I have a whole crew,” Cortes said.

She added she currently is overwhelmed by the grave illness of close relatives which must take precedence.

That may be. Nevertheless, city officials plunked the house onto the city’s top-10 STOP list (Stockton’s Top Offending Properties). Obtaining a warrant, they inspected the premises. A structural engineer is writing a report detailing necessary repairs.

When the report comes in, officials could abate the house, paying to have it repaired then recouping expenses through taxes or sale. They could petition courts to appoint a receiver to oversee the job.

Neighbors applauded.

“Yay for the city!” Shirley Robbins said.

“That’s wonderful news,” Nicole Jacobs said.

“I’ll believe it when I see it,” Sheldon said.

Right. The family could plead with the judge managing the receivership that given just a little more time they’ll fix the house. Granting them more time would seem the height of naiveté. But it could happen.

There’s another possibility. Because the roof leaks, parts of inner exterior walls have long been exposed, and dry rot is pervasive, the house may irreparably unsound.

It may need to be demolished.

The city will decide soon. While no one is eager to see a vacant lot, don’t expect a two-hanky cry from neighbors should the house get the wrecking ball.

Said Shirley Robbins: “I guess I’d rather see a vacant lot than that house.”

Contact columnist Michael Fitzgerald at (209) 546-8270 or Follow him at and on Twitter @Stocktonopolis.

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Lake District Developer Pays Back Lender, Project ‘Gathering Steam’

A little more than a month after Gilad Development Co. began demolition of the shuttered Lakeland Factory Outlet Mall to pave way for the $375 million Lake District project, the developers have cleared another major hurdle.

Albeit this time it’s behind the scenes, as any remaining issues with the project’s original lender Tremont Realty Capital, have been put to rest.

“They have been paid off in full and they are no longer a factor at the Lake District,” Gilad president Yehuda Netanel said. “That means the threat of foreclosure that was looming over the project has been officially removed.”

The issues surfaced in August when Tremont, operating under the name Tremont New Funding I LLC, ran a foreclosure notice in The Daily News pertaining to a $24 million construction loan Gilad took out in 2007 for the development’s original 35 acres.

Yehuda Netanel, president of Gilad Development Co., speaks to attendees of the Lakeland Factory Outlet Mall demolition on Oct. 25. (Daily News File/Houston Cofield)

Plans for the mixed-use development eventually grew to encompass 165 acres, and everything seemed to be on schedule until Tremont, which was acquired by RMR Group in 2016, sought to foreclose on the property.

When the notice became public, Netanel told Lakeland city officials the news had caught him off-guard but wouldn’t stop his project from becoming a reality.

On Sept. 8, the day Tremont’s portion of the property was to be auctioned on the Shelby County courthouse steps, Netanel and his lenders reached a last-minute payment agreement.

Lakeland vice mayor Josh Roman said the Lakeland Industrial Development Board was asked to enter into a development agreement with Netanel the week before the auction as a way of showing support for the project and providing leverage with the bank.

“It looks like that was able to help,” Roman said at the time of the auction. “We understand that for us to have a high school in the very near future, the Lake District needs to become a reality.”

The project took its first tangible step forward Oct. 25 when demolition work began on the former outlet mall.

Now that the lenders have been paid off, Netanel said he is happy the project is moving ahead with confidence.

“The Lake District is gathering steam, and we are now putting together our select group of homebuilders,” he said. “Demolition is ahead of schedule.”

Netanel added that during the course of the demolition, roughly 45,000 tons of material will be recycled, with most of it being reused to build the Lake District.

“That includes at least 35,000 tons of asphalt, concrete and masonry that will never leave the site,” he said. “About half of the road base for the project is being done by pulverizing existing asphalt and concrete.”

He said this alone will save more than 3,000 truckloads of aggregate material from being hauled onsite.

“There is also about 12,000 tons of steel being recycled, so by weight, at least 85 percent of the existing material is being reused, and that makes us a very green project from the get-go.”

When asked what the next step for the project will be, Netanel said he is close to making the project’s first major tenant announcement, which is expected to come before the end of the year.

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Construction halted at 800-foot Sutton Place tower after City Council approves rezoning

The original rendering of 3 Sutton Place by Foster + Partners

Gamma Real Estate will stop work on Sutton 58, a proposed 800-foot-tall residential tower at 3 Sutton Place, after the New York City Council voted on Thursday to rezone 10 blocks on the Upper East Side. According to The Real Deal, the rezoning requires properties between 51st and 59th Streets east of First Avenue to follow ‘tower-on-a-base” rules, meaning 45 to 50 percent of the building must be built below 150 feet. This drastically changes the developer’s plan for a soaring skyscraper and also caps the height of future buildings.

The East Rivers Fifties Alliance (ERFA), a coalition of local residents, along with Council Member Ben Kallos, led the rezoning efforts beginning in June, hoping to set a 260-foot height limit for mid-block sites in the Sutton Place neighborhood. The City Planning Commission later updated the application in October, requiring the now-approved tower-on-a-base rules.

According to city law, if there’s been significant progress on a project’s foundation or it’s complete, the site might be immune to the zoning changes. Because of this loop-hole, Jonathan Kalikow, the co-founder and president of Gamma, has said he will appeal the decision because the foundation for Sutton 58 will be completed in two weeks. However, the appeal process could take months, possibly ceasing construction until the spring or early summer.

“In blindly following Council member Ben Kallos, the New York City Council just put more than a hundred New Yorkers out of a job tomorrow, right before the holidays,” Kalikow said in a statement to The Real Deal. “This shameless political move gives Council member Kallos a temporary political win so he can cater to a handful of rich constituents who do not want their million-dollar views obstructed.”

While Gamma, and others opposed to the rezoning, believe the ERFA wanted to block this specific tower, the president of the group Alan Kersh, said the zoning effort “was never about just one building.”

“It was a district-wide application to prevent megatowers on soft sites. It was a successful effort to deter assemblages of parcels containing low-rise, often rent-stabilized, housing to be demolished for the construction of megatower,” Kersh said in a statement Thursday.

The ERFA’s effort to rezone Sutton Place began before Gamma ever owned the site. As 6sqft previously reported, Gamma won the foreclosure auction and closed on the $86 million acquisition of 3 Sutton Place, which includes three neighboring lots, in April. Soon after their purchase, the developer demolished three tenement buildings on East 58th Street.

[Via The Real Deal]


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