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July 8, 2008

House of the Day: 1171 Dean Street

1171-Dean-Street-0708.jpg
This four-story house at 1171 Dean Street in Crown Heights just hit the market with an asking price of $595,000 and the full disclosure that it's a handy-man special. With plenty of original detail, it definitely has potential. Now here's the weird thing: This house changed hands for $850,000 two years ago according to Property Shark! So either someone's taking a serious bath or there's some mortgage fraud going on. Regardless, it'll be interesting to see how a how in this condition in this area will sell in today's market.
1171 Dean Street [Mark David] GMAP P*Shark




Posted by Brownstoner at 1:58 PM | Comments (57)
Categories: Crown Heights, HOTD

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Not sure I see the mortgage fraud angle here - care to explain Brownstoner?

Posted by: guest at July 8, 2008 2:04 PM

Rubber Duckie, you're the one,
You make bathtime lots of fun,
Rubber Duckie, I'm awfully fond of you;

Woo woo be doo

Posted by: guest at July 8, 2008 2:12 PM

sure. one key element to mortgage fraud is massively overpaying for a house. In this case, the buyer paid $850,000 and financed $807,500 (95%). And now two years later it's on the market for $595,000. We have no idea what the story is in this particular case but, as we said in the post, there are two options, "someone's taking a serious bath or there's some mortgage fraud going on."

Posted by: brownstoner at July 8, 2008 2:16 PM

Phony appraisal, to sustain large mortgage. Seller and buyer split mortgage proceeds in some fashion. Buyer now has vastly overpaid for house; defaults and disappears.

Posted by: guest at July 8, 2008 2:16 PM

This'll be a nice place for someone who doesn't mind dying young.

Posted by: guest at July 8, 2008 2:16 PM

Guy takes out mortgage on 95%(borrowed $807500) of supposed sale amount which is inflated for house needing lots of work.
Guy with same name also involved in scam..
http://www.nysun.com/new-york/broker-city-employee-arrested-in-homeless-program/54726/

Posted by: guest at July 8, 2008 2:17 PM

say the house is worth $600k.

1. scammer a, who owns the house, sells it to scammer b for $850k. scammer b is able to get a mortgage for $800k even though house is overvalued, because banks were lax 2 years ago about credit, appraisals, etc.

2. b stops making payments on the property. bank forecloses or does workout with b. b walks away.

3. a and b split their $200k ill-gotten profit.

4. house ends up back on market at true market value.

not saying that's what happened here, but that's one way mortgage fraud can work.

Posted by: z at July 8, 2008 2:21 PM

also, love the litterbox in front of the fireplace! the smell can just waft right out the chimney.

Posted by: z at July 8, 2008 2:28 PM

I was interested in a house recently that was clearly part of a mortgage scam. The house is located in Crown Heights, vacant and in need of a lot of repair.

Owner A bought the house in 2004 for $350K, then sold it in 2005 to Owner B for $615K, taking out $557 in mortgages which went into lis pendens in 2007.

Owner A is now selling the house again, even though his name is not on the title. It was advertised as a short sale for "$500K, maybe less," but when I made an offer, Owner A said he would only agree if I paid him $60K cash under the table, defrauding the bank of the rest. As the agent said "he expects to get something out of this for his trouble."

No one knows where Owner B is, but the agent assures me "she's in the picture, but Owner A is handling this for her."

I didn't feel like sharing a jail cell with them, so I walked away.

Posted by: laurie at July 8, 2008 2:29 PM

Another angle-- the fraudsters don't even have to let the thing go into foreclosure. Before this year, one way to combat mortgage fraud was that any difference in a short sale was regarded as earned income. Thanks to Barney Frank and Chris Dodd, who believe that no one who is losing their house could possibly be a fraudster or speculator, you can just sell your house for hundreds of thousands less than you paid for it and have no tax repercussions.

Posted by: guest at July 8, 2008 2:32 PM

Could be mortgage fraud, but $600,000 actually seems pretty cheap for a 4 story house on Dean. What surprises me is the price they're asking now. Sign of a rapidly softening market?

Posted by: Brooklynnative at July 8, 2008 2:35 PM

id pay 300k for it

Posted by: guest at July 8, 2008 2:35 PM

The house will sell real quick, in that price range. Its going to sell in mid 500's. It's prob a short sell. Any one in the world would pay 300 for it. You would even pay $450 for it.

Posted by: 2009 at July 8, 2008 2:52 PM

By the way its also an SRO

Posted by: 2009 at July 8, 2008 2:55 PM

Very interesting examples.

But I do think the banks are participants in the fraud here, not the victims. They outsource so much of the work, made their fees on mortgages, and generally didn't care what the properties were worth. It wouldn't take much for a bank to have someone actually look over outside appraisers work to sniff out this stuff - using common sense is underwriting 101. But they didn't care.

The banks generally did this because they were able to immediately sell the mortgages to structured securitizations - bonds backed by pools of mortgages. The banks got their fees and were no longer affected by whether the buyer paid their mortgage or not. The institutions who bought the bonds backed by the mortgages were left to take the losses. Banks turned themselves into entities that made their money off of fees, rather than prudent lending.

So it isn't really the banks who took the hit here - which is what comes to mind when we hear "mortgage fraud" - its all of us - anyone who has any money invested in almost anything at all - in the pension funds or other funds who buy these structured bonds backed by mortgages, or who had money in funds invested in the stock of financial or other institutions who bought the structured bonds (which is just about all mutual funds) - we're the ones who lose.

As well as the rest of the taxpayers, who will, once again, likely somehow end up bailing out the financial institutions who looked to their short term profits (which went largely to high-level employee compensation, and to shareholders who sold before the stock went down.)

And the banks and other financial institutions' directors and managers basically couldn't care less about the fraud on the markets they participated in. They're just looking for other market sectors to find the next opportunity to do it all over again with some kind of loans other than mortgages.

Posted by: guest at July 8, 2008 2:57 PM

Based on what I've seen in the neighborhood, I think $595K is the right asking price, although I'd probably offer less based on the work required. I'm guessing it needs new kitchens and baths, maybe a roof and a boiler.

Also, the block is a bit sketchy. While there are some fabulous building and it's in the historic district, there are at least a half dozen houses on the block that are boarded up. Not sure if they're undergoing renovation or housing pigeons.

I saw this posted yesterday and was going to try to see it. I'll let you know if I do.

Posted by: laurie at July 8, 2008 2:58 PM

'Located on noteworthy Dean Street, this home resides on one of Brooklyn’s most beautiful streets.'

What's so noteworthy about Dean Street in Crown Heights?? And how is it one of the most beautiful street in Brooklyn?

Posted by: guest at July 8, 2008 2:58 PM

naw I would pay 300k for it.

Posted by: guest at July 8, 2008 3:03 PM

And last time I checked, buildings don't "reside" People do. Supervising broker should proofread this stuff.

Posted by: guest at July 8, 2008 3:07 PM

"a bit sketchy"? Now there's an understatement. Buy this house if you want to run home from the subway during the day (be sure to take a buddy) and lock yourself in your house at night. And I do mean LOCK YOURSELF IN with deadbolts and/or rolldown shutters. This street (and really the whole surrounding neighborhood) is the pits and will only get worse as the economy turns and the neighboring criminals get desperate for money for their next crack rock. You couldn't get me to live there if the house was free. Only a totally stupid sucker or out of towner who doesn't know better would buy that house.

Posted by: guest at July 8, 2008 3:08 PM

Guest 2:58, If you walked down Dean Street between Nostrand and Kingston, you'd understand why it's one of the most beautiful streets in Brooklyn. It really is beautiful. We looked here a few years ago but bought a condo in prospect heights... that turned out to be a crappy new build. I wish we'd bought there now but prices haven't come down enough yet...

Posted by: guest at July 8, 2008 3:12 PM

The agent is showing another house on the same block. It was listed as an open house on this site a few weeks ago, but the agent didn't have access. She called over the holiday weekend to say it's now showing. But the pics on the site look like it's a lot more work than I want to take on.

http://www.markdavidny.com/sales/prospect.heights/0br/2/27063TH

Posted by: laurie at July 8, 2008 3:24 PM

I'm going to be one of the suckers that goes to look at this house.

As a young couple looking to buy a house under 700K, we're limited to neighborhoods.

Wish this was closer to Eastern Parkway than Atlantic. Who wants to cross that wide street to get home from the train station.

Posted by: guest at July 8, 2008 3:33 PM

Hey, 3:08, where is the house you own?

Posted by: guest at July 8, 2008 3:35 PM

looks like the other house, some one started to renovate. Can you even get a mortgage for a house in that condition?

Posted by: guest at July 8, 2008 3:36 PM

ive only walked around crown heights once and it was walking to Brower Park from the 2/3 stop about a year ago. It was around 8 in the morning and didnt feel unsafe at all.

at night I dont know.

house is awesome looking tho. Im however am only 23 so I have no money. Going in with several friends would work. You could create some fucked up fight club house.

Posted by: guest at July 8, 2008 3:48 PM

Aw, 3:08, it's good to know sensationalist hyperbole isn't dead, here on Brownstoner. Since I live a block and a half away from this house and take the same subway, walk the same street to get home, etc, etc, I can unequivocally call bullsh*t. This neighborhood is far from the pits, and this block is an architectural treasure trove, as is all of Dean between Bedford and Kingston, as 3:12 said.

One of the most beautiful houses on our house tour last year is on this block, and I know several homeowners who have lived here since childhood, and have been in their homes for over 50 years. It's a quiet block with a lot of community minded homeowners, and there is much pride of place in front gardens and people taking care of their homes for the most part. There are a couple of boarded up houses, all of which are spectacular buildings that cry out for renovation. I know that a couple of them, including 2 of the huge Queen Anne's on the south side of the street, are owned by the same person, who also lives in another house on this block. He has been working with LPC and HPD to get funding to renovate, so these houses will not be boarded up forever.

This block is 4 or 5 blocks from the Nostrand Ave A train, and the hike up to Eastern Parkway isn't that far, if those trains suit you better. Crossing Atlantic is not difficult if you wait for the walk signs, which anyone should do on a busy thorofare. Crossing Eastern Parkway is actually a longer crossing, and I don't get what the big difference would be.

Cheerleading again - yeah, 'cause this is a fine location, and an investment here will be worth making for those who are looking for a family home in a decent neighborhood.

Posted by: Montrose Morris at July 8, 2008 3:54 PM

How difficult is it to change the Certificate of Occupancy on an SRO assuming you can get the non-harrasment document signed ?

Posted by: guest at July 8, 2008 4:03 PM

3:36 With the new higher FHA limits, I think a buyer could get a mortgage and a rehab loan.

Posted by: nosleeptil at July 8, 2008 4:06 PM

I don't think this is an SRO.

ON DOB website, there was compliant about it being an SRO. An inspector tried to go there but had no access. If it was a legal SRO, they wouldn't bother going.

Posted by: guest at July 8, 2008 4:11 PM

Those who downplay the dangers of this neighborhood should really check themselves. Your desire to prop up your own property values could easily get someone killed.

This is a very, very dangerous place and extreme caution should be exercised. If you're ready for this sort of challenge, then by all means proceed, but know what you're getting into.

Posted by: guest at July 8, 2008 4:16 PM

I think Crown heights is swell....I however prefer southern Crown to northern. Course I'm biased...

Posted by: moreteasir at July 8, 2008 4:24 PM

Property Shark lists it as a three-family. There's no CofO on the NYC buildings site.

I agree with MM -- this is a great area and that's why I'm looking there. I've spent many weekends and evenings walking around the area and as safe as I do in Manhattan. As the boarded up houses come to life, it will only get better.

OK, I know, I opened up the "a bit sketchy" comment. What I was trying to point out is that the homes on the block are in transition, not that it was crime ridden.

Posted by: laurie at July 8, 2008 4:26 PM

I'm so glad people who live in the neigborhood know what their talking about... To the young couple looking for a house go check it out.... 4 family house for this price and a brown stone..... Please you can't go wrong. I have friends who bought in that neighborhood and rennovated the home and the garden the place is a gem the block just got landmarked... I wish I had money to get the home... you can get yr money back with the rental apartment... As a matter of fact I'm going to check it out....

Posted by: guest at July 8, 2008 4:32 PM

"With the new higher FHA limits, I think a buyer could get a mortgage and a rehab loan."

Ha!

Posted by: guest at July 8, 2008 4:32 PM

The house I have been waiting for! I will go and see it.

Posted by: guest at July 8, 2008 4:37 PM

Dude's it Brooklyn, you can get killed anywhere in Brooklyn, no matter the neighorhood

Posted by: 2009 at July 8, 2008 4:44 PM

Yeah 3.08 I call bullsh*t too. I wouldn't have known there was anything beautiful around this area... but then I put it on my jogging route and I can tell you, having been there (unlike you I suspect) that there are some really beautiful houses. Some parts of Dean have extraodinary examples of architecture.
...and it felt safe to me. It is a little run down, but it was clearly once a grand area and will be again one day when money and reasources flow back into the area.

Posted by: guest at July 8, 2008 4:55 PM

Brownstoner:

Of all the blocks in my 1950s boyhood neighborhood, Crown Heights, this is closest in scale, texture and architectural quality to Chicago's famed Gold Coast.

Those Queen Anne numbers with shingled gable roofs are knockouts! And around the corner is the Imperial Apartments, recently and terrifically renovated, Brooklyn's rival in style to the Dakota.

When I visited this block recently, it looked as handsome as I remembered, even though some houses await restoration. A quiet block in an increasingly desirable and expensive neighborhood. And with Landmarks designation, sure to improve.

For everybody? Apparently not. But for the committed long-term buyer (rather than the good-time speculator), not bad at all.

Nostalgic on Park Avenue

Posted by: guest at July 8, 2008 4:58 PM

Ok noisey, busy bodies; how about this. Someone (broker) buys the house in a short sale for 400k area and is now selling it for $595,000 (hoping to get more). Now which one of you suckers are ready to bid?

Posted by: guest at July 8, 2008 5:05 PM

what website do you use to find out the sale history of a house?

Posted by: guest at July 8, 2008 5:12 PM

"sure. one key element to mortgage fraud is massively overpaying for a house. In this case, the buyer paid $850,000 and financed $807,500 (95%). And now two years later it's on the market for $595,000. "

Huh Brownstoner, do you really know the details of this deal?! Looks like again you are talking out of your ass!

"We have no idea what the story is in this particular case but, as we said in the post, there are two options, "someone's taking a serious bath or there's some mortgage fraud going on."

Oh now it's a "Opinion". Do you have access to say Brooklyn MLS? Or maybe hold a Broker License ? Or maybe have done Mortgages?

See Brownstoner why you get into trouble?! BTW Where is Sarah Ryley? Did you kill her or she couldn't stand you anymore/

The What

Someday this Blog is gonna end...

Posted by: what at July 8, 2008 5:20 PM

I know this house, they did a short sale and got a discount, they offered me this house 2 months ago for 500k and I've passed, guess somebody else close on it and want's to resell it.

Posted by: guest at July 8, 2008 5:26 PM

5:12, to find sales history I use PropertyShark.com. They list all the title changes that include the sales price.

You can also search the city database at http://www.nyc.gov/html/dof/html/jump/acris.shtml

Posted by: laurie at July 8, 2008 5:38 PM

what's a short sale?

Posted by: guest at July 8, 2008 6:19 PM

It's the real estate equivalent of a short stack.

Posted by: guest at July 8, 2008 6:27 PM

This house will go FAST...

Posted by: guest at July 8, 2008 6:47 PM

It's when a shady 5 foot 1" broker sells you a crackhouse for $600,000.

Posted by: guest at July 8, 2008 7:25 PM

I'll have two of them with strawberries and syrup.

Posted by: guest at July 8, 2008 7:30 PM

A short sale is when the property is sold for less than the outstanding mortgage. The bank writes off the remaining mortgage, but does not get stuck holding the property. The seller gets out of the mortgage they won't pay with a mark on their credit report that is less severe than a full foreclosure. And the buyer usually gets a good deal on the property.

In most states, if a borrower misses three payments the house goes into foreclosure and up on the auction block. In NY state, after three months the house goes into "lis pendens," then it usually takes about 18 months before it goes to auction. That gives the owner sufficient time to try to sell the property, refinance, or find other options.

Posted by: laurie at July 8, 2008 7:42 PM

The above poster is correct about crime rates in this area. The 77th precinct has 12 murders so far this year, one of the highest citywide and nearly twice as many as the 75th, which covers East New York and parts of Brownsville.

Posted by: guest at July 8, 2008 7:44 PM

I'm so over people ignorantly hyperventilating about crime in neighborhoods they want to trash. Stupid. Crime stats are lower in NYC than they have been in decades. 70% of the (very few) murders that happened last year were between people who knew each other and had conflicts. Not random.

Crown Heights is beautiful and has a lot of potential. I don't live there, but I would.

Ya know, asshats, people get murdered in Beverly Hills, too.

Posted by: Rehab at July 8, 2008 10:00 PM

That said, I would not have featured a photo of the freakin' litter box in my listing. Who the hell is this MarkDavid realty company? Sounds like a hair salon.

Posted by: Rehab at July 8, 2008 10:02 PM

7:44:

Most murders occur between people who know each other or who are part of gun-toting, knife-wielding social groups or who associate with such groups (unlikely for the kind of people who would buy this house).

By the way, NYC crime and murder statistics are now down to those similar to when I was growing up in Brooklyn (50s - early 60s) -- the "age of innocence," or so the NY press would have us believe.

NOP

Posted by: guest at July 8, 2008 10:20 PM

4:16, get real. I've been living there for years, and I'm not dead yet.....

Posted by: guest at July 9, 2008 12:30 PM

If you buy the house, do they throw in the cat?

Posted by: guest at July 9, 2008 2:08 PM

This house was just listed for $750 by Brooklyn Atlantic. Saw the listing on Property Shark today.

If Mark David can't sell it for $595, how will they sell it for $750?

Posted by: laurie at July 9, 2008 2:09 PM

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