Tammy and Sanford Goldberg have had their share of financial
setbacks, what with Tammy out of work, Sanford injured on the job and a
bankruptcy filing a few years ago. Yet they dutifully paid their
monthly rent, unaware until two months ago that the Escondido condo
where they live was headed for foreclosure.
Their neighbor, Renee Calabrese, three days after having
a baby in February, received her first letter from a lender saying the
owner of her condominium was behind on the mortgage.
The renters are unwitting victims of a mortgage scheme
that used apparent straw buyers to purchase about 80 condominiums last
year in three condo-conversion complexes in Escondido and San Marcos.
Not only have the mortgages on the units gone largely unpaid, but the
firm that allegedly arranged the purchases has been collecting rent on
many of the units.
Nearly all of the condos are in default. And some of the
borrowers, who expected to be paid thousands of dollars for the use of
their now-damaged credit, say they feel worst about the renters they
never knew existed.
“I think it's criminal what's happened to the renters,”
said investor Annemarie Miller-Jones of Orange County. “These are nice,
nice people who are the true victims.”
Some of the renters have decided to start looking for new
places to live; others said they will remain and stop paying rent until
they are formally told to leave.
What especially infuriates some of them is that they said
they received conflicting stories from the management company that
collects the rent.
Some said San Diego-based Concord Management told them it
owned the distressed condos and was renegotiating a bank loan to
resolve the problem. Later, some renters said, company representatives
told them that they simply managed the units and then clammed up when
pressed for answers.
“We're all going to be kicked out by the bank,” said
Calabrese, who is on maternity leave and has contacted a renters
hotline for advice. “I have a family to worry about. If we move, we
have to come up with the first month's rent and we have to come up with
a deposit. Then there's moving costs. It's not cheap to move.”
Victor Goliac, owner of Concord Management, said he was
hired by James McConville, a Northern California businessman, to manage
and rent out units that he believed McConville owned.
But neither McConville nor his company, Diamond House
Development, ever owned the condos, located in complexes that were
upgraded and marketed by Premier Coastal Development, which was at one
time among the county's most prolific condo converters.
McConville recruited several investors throughout
California to take out mortgages on condos he would purchase on their
behalf with the understanding that the homes would be quickly
transferred out of their names, according to interviews with several of
the buyers.
They said McConville verbally promised a fee of $5,000 to
$10,000 for each loan they were approved for and said they would not be
responsible for the mortgage payments.
Efforts to reach McConville, who in 1998 was convicted of
grand theft and ordered to pay restitution in an insurance scam, were
unsuccessful. Investors have contacted the Alameda County district
attorney regarding the case, but that office would not say whether an
investigation is under way.
Goliac, who insists he knew nothing of McConville's
alleged efforts to bring in straw buyers, said he gave notice to the
Alameda County man that he is ending his contract with him after
learning from renters and reporters about the scheme.
“He told me, you take care of the property, collect the
rents and send me the money,” Goliac said. “I haven't the foggiest idea
of how he did the deal. I thought McConville owned the units. What has
happened here is not my doing. I didn't know I had to run background
checks on my clients.”
Those renters who decide to leave can be assured they
will get their security deposits back as long as their units are left
in good condition, Goliac said. However, he does not believe renters
have the right to start withholding rent.
“I understand what they want to do, but I'm not in a
position to give them a free ride,” Goliac said. “When my contract ends
with this guy, they can deal with him.”
Tammy Goldberg, who formerly managed call centers for a
living, said she believes she has every right to stop paying her
monthly rent of $1,395 – for now.
“We're going to stick it out and save our money as though
we're paying our rent,” she said. “When we get the eviction notices,
we'll bring them to court and all our paperwork from the mortgage
companies, and we'll let a judge know that payments have not been made
on the mortgage.”
San Diego Legal Aid attorney Gregory Knoll, who has spoken with Goldberg, said not paying rent carries some risk.
“It's a very calculated guess. You've got to figure out as close as you
can to when you have to leave so you don't get an (eviction),” said
Knoll, executive director of the Legal Aid Society of San Diego. “A
record of that will make it very hard for you to rent again.”
In this instance, however, Knoll said the renters are
caught in a scheme so complex it may make sense for them to withhold
rent “until they know who it goes to.”
Yesterday, Tuesday Chapman and her boyfriend, Tom Bray,
had been hoping to stay in the Sommerset Woods unit they had been
renting for a year until at least this summer. Bray was laid off from
his plumbing job recently but expected to return to work around June.
At that time, they hope to buy a house. Their condo is expected to be
auctioned off on the courthouse steps April 27.
When they started getting default notices from lenders
six months ago, they said they too were told by Concord that it was
trying to rework the terms of its mortgage.
“We're waiting to see what happens on the 27th,” Chapman said. “We're not prepared to move, but we will be if we have to.”
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