This House is a Steal

While we await the 10am Existing Home Sales, have a gander at this delightful article from this weekend’s Chicago Tribune. Its a bizarre tale of Housing excess, corruption, and fraud:

"The new buyers of a rundown graystone on the South Side showed up Jan. 9 to look at the house they won at a foreclosure auction. They took the plywood off the front door and went inside to make sure the utilities had been shut off. Then they called the police.

Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.

The cause of Johnson’s death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson’s house was transferred three times to new owners without anyone noticing he was inside. It’s a story involving forged deeds, a corrupt title company and a South Side family that has been under investigation for mortgage fraud."

How on earth is that possible? Three transfers, and not a single property appraisal or inspection?

Bizarre…

>

Source:
This house was a steal
Susan Chandler,
Chicago Tribune, February 24, 2008
http://www.chicagotribune.com/business/chi-sun_fraud_0224feb24,1,7543625.story

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What's been said:

Discussions found on the web:
  1. X commented on Feb 25

    I read a story about something like this from the Baltimore area. The difference is they think the bones had been there since around 1981.

  2. Marcus Aurelius commented on Feb 25

    They need to spin this as a positive development. This house has character. Real character. To die for.

  3. larry commented on Feb 25

    I guess this answers the question, “Is housing dead money?”.

  4. michael schumacher commented on Feb 25

    Sad to say I was not wholly surprised by this and make note that things like this will only get worse. over the last several weeks I have noticed a wholesale change of mood (for the worse) in our social fabric.

    but hey…let’s send the market up on a rumor that is so tired I can’t even begin to think it has any validity….oh sorry that was friday….what’s the tumor.. I mean rumor today??

    Ciao
    MS

  5. JustinTheSkeptic commented on Feb 25

    Great metaphor, headline for the entire construction industry…skeletal remains, remain! lol…

  6. Roger Bigod commented on Feb 25

    This tragedy could have been prevented if only he’d known about youwalkaway.com. I hope they got good footage for the next ad. A shot of the owner might be a little disturbing for prime family time, but the dog would probably be ok.

  7. Christopher Laudani commented on Feb 25

    Now that would make a truly great episode of “Flip That House”!

  8. Hal commented on Feb 25

    this area is not exactly the best place to be in one of the poorer areas of Chicago

  9. Rob Dawg commented on Feb 25

    How on earth is that possible? Three transfers, and not a single property appraisal or inspection?

    Florida 1925 all over again.

  10. bluestatedon commented on Feb 25

    I can picture this as a perfect Gahan Wilson cartoon.

  11. bluestatedon commented on Feb 25

    I could also see it as the opening scene in a L&O episode. If you’re familiar with the show, the script practically writes itself.

  12. Bud commented on Feb 25

    What ever happened to the days when the seller left some fresh baked cookies as a house warming gift?

  13. Growler commented on Feb 25

    Don’t forget, this happened in Chicago. It is not called the Windy City for nothing.

  14. E commented on Feb 25

    More evidence for the breakdown in our society. Used to be, folks would keep their skeletons in the closet. Now they are keeping them in the corner of the bedroom. What’s next, the breakfast nook? The teen suite? The front porch?!?

  15. M.Z. Forrest commented on Feb 25

    For those that didn’t read the story, the dead man is kind of ancilliary. It started when someone filed a 5+ year old title transfer. The mother who owned the home had died, and they forged her name. (Transaction 1.) They then sold the house to a straw buyer who got a loan from Countrywide. (Transaction 2.) He never makes a payment and Countrywide forecloses. (S/B Transaction 3, but oh well.) Countrywide then auctions the house. (Transaction 4; trasaction 3 in the story.) The winner of the auction looks at the property and discovers the body. This last transaction has been rescinded leaving Countrywide holding the bag.

  16. Don commented on Feb 25

    Shows how easy it is to steal money from mortgage companies. And why you should short title underwriters, if you haven’t already. The underwriter that issued a policy to Countrywide would be on the hook for the actions of its agent (the defunct title company) in writing a policy on what they knew had to be a fraudulent deed. It’s real simple–any deed older than about five years that isn’t recorded bears a presumption of fraud, but especially when the notary and the grantee’s last names match.

    I don’t get how the article tried to make this into a tale of mortgage company fraud, by implying that Countrywide did something wrong. They were the victim here.

    Notwithstanding Countrywide is the favorite mortgage whipping boy, it did what any other mortgagee would and relied on a title insurance binder (a report detailing who opens the property and what liens are against it) that was fraudulent. But no mortgagee that I know of (and I’m in the business) would look behind the title binder to check up on whether the title co. did its job. Title companies issue insurance policies based on binders they provide the closing agents and mortgagees. If their binder is based on their collection of bad or fraudulent information, then they buy the loan. Situations like this are one of the only reasons to buy title insurance.

    The defunct title company had an underwriter that is ultimately on the hook for the loan. That’s the way the business works–the underwriter has ultimate liability to the lender for any bad binders it issues, so to make it look like Countrywide lost $450,000 in this deal is wrong. Some title underwriter did, and none of them have gone under, yet. But I wouldn’t go long on them just now.

  17. Camille commented on Feb 25

    I think with the right marketing you could get more money for a house with a corpse in it. “New lower price! Free bonus corpse! Move in condition!” Certainly there must be some Vincent Price types looking for a home like this. I secretly yearned to find something creepy in my house when I bought it, but all I found was some old empty beer bottles in the wall cavity.

  18. D. commented on Feb 25

    As long as you’re the owner, you should know what’s on your land. The owner should have known and is responsible.

  19. Roger Bigod commented on Feb 25

    Apparently it was the underwriter’s legal responsibility to realize that something about the transaction smelled bad.

  20. harold commented on Feb 25

    In the aftermath of the Great Depression we had thousands and thousands of homeless bums and alcoholic vets milling about on the Bowery and Union Square until the 1960s and 70s.

    Now we are having thousands and thousands of people dying alone and unclaimed in their houses.

  21. David commented on Feb 25

    In Chicago, the dead not only vote, but they buy and sell houses too!

    I love my town.

  22. Darkness commented on Feb 26

    >but the dog would probably be ok.

    Oh, I feel most bad for the dog. The owner presumably perished of something sudden, but the dog, the ever loyal dog, stayed beside his master and died the slow hard way.

    What I don’t get is why no one smelled this, nor heard the dog going crazy for days on end.

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