7 families pay for landlord's alleged scheme
He defaulted on 7 mortgages, is missing -- they face eviction
June 25, 2008
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BY MARK BROWN Sun-Times Columnist
Without borrowing or lending so much as a nickel, seven families living in an
Albany Park apartment building have become the unwitting victims of the
mortgage foreclosure crisis -- and possible fraud by their landlord.
And their story may be the tip of yet another treacherous iceberg in these
turbulent economic waters.
» Click to enlarge image
Sun-Times columnist Mark Brown
The families, many of whom have rented their apartments at 4914 N. Spaulding
for more than a decade, were stunned in late May to come home to find notices
on their mailboxes telling them they had a week to vacate the building or face
eviction.
Unbeknownst to the families, who were current on their rent, their landlord had
defaulted on his mortgage and lost the property through foreclosure.
But it was even worse than that.
The building owner, Mihail Stancu, had secretly converted the building to
condominiums upon buying it in 2006 without telling the tenants. Then he
"purchased" each of the seven units from his own company, taking out seven
individual mortgages from seven different lenders -- one for each unit in the
building.
Stancu managed to borrow $1.85 million in this manner, only months after having
purchased the entire building for $765,000 and without making any improvements.
This next part probably won't surprise you: after realizing this amazing $1
million profit, Stancu is nowhere to be found. Obviously, he hasn't made his
mortgage payments. With any luck, the FBI will soon be looking for him.
"It's hard to believe, but it's true," long-time tenant Maria Cruz told me
Tuesday.
Stancu's tenants didn't know any of this, however, until after they received
the threatening notice on their mailbox. They had continued paying their rent
and maintaining the property, even though they hadn't heard from Stancu in
months. Stancu had told them he was taking a trip to Europe and enlisted one of
the tenants to collect the rent, pay the utilities and deposit the balance in
Stancu's bank account.
Fortunately for the tenants, community organizers with the Albany Park
Neighborhood Council have taken up their cause and are fighting to keep them in
their apartments, which won't be easy.
They'll be facing seven big mortgage lenders who still don't seem to have a
handle on how badly they were duped -- or care who could get hurt in the
process.
And here's the real eye-opener:
Local industry experts investigating this problem believe there may be as many
as 200 multi-family buildings in Chicago that have fallen victim to similar
scenarios involving fake condo conversions, phony purchases and inflated
mortgages. Only one such case was included in last week's big mortgage fraud
crackdown by the U.S. attorney's office in which 67 people were charged, which
would seem to leave plenty of fertile ground, except the cases are tough to
prosecute.
Diane Limas, a volunteer housing leader with the Albany Park group, said the
organization is determined to protect the rights of the seven families, but
also is working with other groups to come up with a plan to give greater legal
protections to all tenants in similar circumstances and to prevent it from
happening again in the future.
For now the organization has enlisted the Lawyer's Committee for Better Housing
and city officials in hopes of forcing the 4914 N. Spaulding building into
Housing Court and possible receivership, which could slow the eviction process.
"We don't want another abandoned, boarded-up building in the neighborhood,"
Limas said, noting that would be a particular shame in this instance because
the building has been very well-maintained by the tenants, who as I've already
said, have dutifully paid their rent.
This wasn't a financially-distressed property until somebody started playing
games with the mortgage companies, who obviously didn't do their jobs very well
either, even if they were scammed.
"What's unique about this building is that the tenants are really great
people," Limas said. "These are a group of people that don't deserve that."
Cruz, the longtime tenant who also is active in the neighborhood group, said
she was initially terrified to receive the seven-day notice. Many of the
families in the building have children who attend Hibbard Elementary School,
just across the street. Her unit was clean, but clearly had not been updated in
recent decades.
"The banks are sitting here thinking these are luxury condominiums, and really
they are just ordinary apartments," Cruz said in Spanish, interpreted for me by
Emily Burns, an organizer for Albany Park Neighborhood Council.
A man walks off with a million dollars and seven innocent families pay the
price. We shouldn't let that happen.
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