We all know that the mortgage industry is in turmoil and that local, national and global economies are all reeling as a result. The losses announced by lenders are surreal. For the most part, the numbers are too staggeringly large to comprehend. There is plenty of finger pointing going on, some of which has been detailed on this site. Certainly, some borrowers got in over their heads; others never understood what they were getting into in the first place; institutional investors demanded more “product” from loan originators who in turn utilized relaxed guidelines (loan approval standards) and gimmick loans to encourage more money lending. None acted alone or in a vacuum. Each parties “fault” is inter-twined with the others. There is shared culpability, more than enough for everyone.
As with most things in our society, clever, nefarious individuals and collectives find ways to take full advantage of these situations. Mortgage scammers took millions of mortgage dollars out of the system. Mortgage fraud was a huge part of the melt down. Any doubt? Just scan the Mortgagefraud.com blog to get a taste of the depth and extent of criminal infiltration into the mortgage lending system.
One such scamster is Mohammad "Mike" Taghie Kakvand.. He was just sentenced to a nine year jail term for his role in a local scam, more fully reported in the Chicago Sun Times this morning.
His story puts a real face on mortgage fraud. Set aside for the moment the financial losses that were worked on the mortgage lenders and their investors ($29 million in loans, all of which were defaulted). Here is a frightfully ugly example of what can happen to an unsuspecting community.
Kakvand bought 33 apartment buildings, mostly in Rogers Park and South Shore. His company, Residential Realty Development sold the individual units at inflated prices, that is, he increased property values / costs in otherwise affordable neighborhoods, by portraying the units as “rehabilitated” condos. Kakvand lined up buyers by telling them that the units would be improved and converted to condominiums. Some buyers were lured into the scheme with promises of "no downpayment." Others were told they would be paid for agreeing to make the purchases. More than 150 mortgage applications were submitted to dozens of lenders.
As Kakvand converted the rental buildings to condos, he displaced the former tenants who were forced to move out.
The now vacant buildings were never renovated as claimed. Nothing but wall studs and exposed copper pipes separated some supposed condo units. Instead, they remained dilapidated and decaying wrecks.
Most buyers never actually moved in. Those that did quickly fell behind in mortgage payments and defaulted on their loans. Before long, squatters and drug dealers took residence in the empty units. Crime increased and quality of life in the area worsened. Fire and water damage only worsened the condition of many of these properties.
Fraudulent or not, the sale transactions all artificially inflated the market prices in the area, making it harder for buyers of “real” condos to afford to purchase them. The costs of restoring or replacing these buildings will increase. The gangs and related crime will have to be beaten back as the remaining neighbors try to reclaim their communities.
The properties involved are:
6963-69 North Ashland Ave, Chicago, Illinois
7309-11 North Ashland Ave, Chicago, Illinois
1949-51 West Birchwood Ave, Chicago, Illinois
6201-03 South Champlain Ave, Chicago, Illinois
639-41 East 62nd Street, Chicago, Illinois
1606-08 West Chase Ave, Chicago, Illinois
1810-24 West Chase Ave, Chicago, Illinois
6940 South Dorchester Ave, Chicago, Illinois
7316-18 South Dorchester Ave, Chicago, Illinois
7700-04 South Essex Ave, Chicago, Illinois
2451 East 77th Street, Chicago, Illinois
1633-35 West Estes Ave, Chicago, Illinois
6157-59 South Evans Ave, Chicago, Illinois
740 East 62nd Street, Chicago, Illinois
7201-03 South Evans Ave, Chicago, Illinois
741-43 East 72nd Street, Chicago, Illinois
1324 West Greenleaf Ave, Chicago, Illinois
2423 West Greenleaf Ave, Chicago, Illinois
7633-39 North Greenview Ave, Chicago, Illinois
7311-13 North Honore Street, Chicago, Illinois
1600 West Jarvis Ave, Chicago, Illinois
7749-53 South Kingston Ave, Chicago, Illinois
6752 North Lakewood Ave, Chicago, Illinois
5922-24 South Michigan Ave, Chicago, Illinois
12130 South Normal Ave, Chicago, Illinois
7647 South Phillips Ave, Chicago, Illinois
4843-45 South Prairie Ave, Chicago, Illinois
5037-39 South Prairie Ave, Chicago, Illinois
5326-28 South Prairie Ave, Chicago, Illinois
1301 West Pratt Blvd, Chicago, Illinois
6752 North Lakewood Ave, Chicago, Illinois
7527-31 North Sheridan Rd, Chicago, Illinois
3215 West Sunnyside Ave, Chicago, Illinois
4400-02 South Vincennes Ave, Chicago, Illinois
4510-12 West Washington Blvd, Chicago, Illinois
7407 North Winchester Avenue, Chicago, Illinois