From bought to rented to foreclosed

Last update: September 5, 2007 - 9:30 PM

New Prague, New Market and several other southern metro suburbs have been the scene of dozens of foreclosures and estimated losses of $50 million tied to the same group of buyers. This is how the events happened, according to those familiar with the transactions:

1. Parish Marketing and Development of Eagan recruited individuals to purchase multiple houses in subdivisions. Those people may not have had enough money to make the mortgage payments on the houses.

2. The buyers found at least one bank officer willing to provide false verifications of bank deposits and other financial data to mortgage brokers, making the buyers appear qualified for the loans.

3. The buyers were betting that housing prices would go up in the subdivisions and they would sell the houses for more than they paid.

4. When the houses didn't sell, the houses were rented in the hope of covering mortgage payments that way.

5. The rent payments proved insufficient to cover the mortgages, so the houses fell into foreclosure.

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