“Land flipping” is a particularly nasty type of mortgage fraud, one that often preys on the most run-down houses in the poorest neighborhoods.
So when an abandoned, dilapidated house near Trowbridge Square was auctioned off two weeks ago, along came Elm City Congregations Organized, or ECCO, a coalition of 18 congregations and neighborhood associations that work together to revive New Haven’s neighborhoods. ECCO organized a demonstration before the auction to protest the activity of real estate speculators and “land flippers.”
ECCO ended up purchasing the house, the latest of some 40 or 50 citywide it has bought already, said Pat Speer, an ECCO organizer.
“Now we’re going to rehabilitate it and sell it to a family,” he said.
ECCO’s current goal is the revitalization of the historic Trowbridge Square district through promoting home ownership and inspiring residents with a feeling of community.
“Our plan for the neighborhood calls for resident-led planning and design,” said the Rev. Jim Richardson of Sacred Heart Parish. “We want to maintain its affordability for poor and working-class people, and we want to do it through home ownership, not through absentee landlords and speculators hoping to make a killing here.”
In its attempt to uncover fraudulent activity, ECCO researches property transactions in the New Haven area, Speer said.
The group’s research recently helped convict two men for their roles in a flipping scheme in the Newhallville, Fair Haven and Hill neighborhoods.
Flipping can be described as follows: an interim buyer purchases a particular property at fair market value and gets a mortgage on the property, only to sell it at a high price to a “straw buyer.”
The straw buyer then gets the property appraised at an inflated value through a crooked appraiser. Using the funds from the original mortgage and some false documents, the straw buyer gets a refinanced mortgage on the house worth far more than the building itself. The two buyers then quickly default on the loans and disappear with the money.
Poor neighborhoods are particularly vulnerable to the scam because in those areas it can be operated under the guise of a program providing homeownership to the needy. This makes ECCO’s task of reviving Trowbridge all the more difficult.
But the group’s organizers said they have made progress. The Sacred Heart congregation and Trowbridge Renaissance, an association under ECCO’s umbrella, have already managed to rid the neighborhood of drug houses, and have restored the local park.
Trowbridge Renaissance takes its inspiration from Simeon Jocelyn, a white abolitionist who helped turn the Trowbridge Square area into a racially diverse neighborhood.
Speer said the neighborhood must put a stop to fraudulent and speculative activity.
“We’re a community, yes, a commodity, no,” Speer said.