La Mirage Tenants Told to Get Out

Friday, May 22, 2009
Adam L.R. Summers
The News Review

As many as 300 local families face the prospect of losing their home to foreclosure - even though they have never missed a payment - and some have less than two months to find a place to live.

Virtually all the units in the La Mirage development are in some stage of foreclosure, including about half hat have been taken back by the myriad banks that held mortgages on the properties.

"We think this is a clear case of innocent victims of a real estate scam," said Andy Blue, an organizer with Tenants Together, a statewide advocacy group for renters.
He was referring to the circumstances that have led to the flood of defaults at La Mirage, which center around James McConville, a man some believe to have orchestrated a series of real estate investment scams across the state.

The San Diego Union Tribune first reported in April on three developments associated with McConville and his company, Diamond House Development. In those reports, investors alleged that McConville paid them fees ranging from $5,000 to $10,000 to use their names and credit to buy units in the developments with the promise to manage the rentals and eventually refinance the investors' names off the properties. Now the investors complain that McConville failed to make payments but continued to collect rent, sending some investors into financial ruin.

A similar situation appears to be playing out in Ridgecrest, where McConville recruited investors from as far away as Massachusetts to purchase units in La Mirage. Then late last year, tax and mortgage payments began to be late on a few units, then what appears to be all the units, resulting in the present foreclosures.

That has left tenants like Jimmy Patterson in the lurch. "I knew something was going on," he said. "Different banks were coming out taking pictures." But when he asked the development's manager, Shannon Thompson, about it, Patterson said she told him that the activity was just related to refinancing the properties and not to worry about it. Then he and his neighbors started getting all kinds of notices - tax defaults, notices of mortgage default, notices of trustee sales - sometimes addressed to people whose names they had never heard of.

When he went to the leasing office and demanded to be put in contact with the owner of his unit, the leasing staff refused, he said. They have accepted rent from him each month, but the foreclosure process has continued. Patterson wondered aloud where his rent money and that of all his neighbors is going after it is given to the leasing office, considering that the taxes and mortgage payments on most of the units are not being made.

Kellye McClarity is also facing the loss of her home. The unit she lives in has already been taken back by the bank after a trustee auction. On Friday a realtor working for the bank served McClarity with a notice to move out.

"Three hundred homes are being displaced in La Mirage," McClarity said. "This is a small city. There's not enough space for people to be able to rent. It's just a mess."
She has put in rental application for another home, but she's worried she won't be able to find a place to live before her time runs out.

In many cases the banks have made offers of "cash for keys" - offering to pay up to $3,000 to each tenant if they will voluntarily quit the premises before their legally required 60-day period runs out. McClarity received such an offer - $3,000 if she will move out within 10 days, $1,000 if she is out by 45 days - but said it hasn't made finding a new place to live any easier. She worries that Ridgecrest simply can't supply enough vacant rental homes in enough time to meet the sudden wave of demand. She also noted that she and many of her neighbors have additional burdens that makemoving more difficult. McClarity is disabled. Some of her neighbors are elderly people without local family members, disabled people and families with young children.

So far, the city of Ridgecrest does not have any aid to offer the tenants who are set to be displaced. "We're sensitive to it, but there are no tools," said Jim McRea, Ridgecrest's director of public services. "It's a civil matter." He said he was unaware of the extent to which many of the properties have progressed through the foreclosure process, but he stressed the city has done all it could. "We did alert the county housing authority. We suggested they might look at it to see if they want to take a
participatory role. Gary Parsons [community development director] was kind of looking at it, but he's off at ICSC this week. There's not much that the city can do."
The Investigations Division at the Ridgecrest Police Department also is treating the situation as a civil matter. A spokesperson for ID said the division is not investigating any matter connected to the foreclosures at La Mirage.

That doesn't mean the tenants are convinced that the city shouldn't be involved. Blue said his organization has helped a group of tenants prepare to voice their concerns and will help at tonight's meeting of the Ridgecrest City Council.

The News Review attempted to contact the leasing office of La Mirage at their published number, (888) 475-0659. It now plays a message that says, "For live talk with exciting people, call [this number]." None of the owners at dozens of La Mirage units for which the News Review gathered contact information returned calls. Many of their numbers have been disconnected. The father of one of the owners said his son had talked to him about his Ridgecrest investment. The father recalled his son - a mortgage broker in 2006 when he bought a property in La Mirage - saying that he was concerned about the investment he had made and the "shady character" he worked for. He was working for McConville, the father said.

FAIR USE NOTICE. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.

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