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Every so often, his workday over, Bradley Collin Jr. steers his Taurus station wagon out of his driveway and onto the flat, windswept roads near his Andover home. ¶ Then Collin gets to thinking about his debts, and the decision he and his wife made three years ago to invest in a get-rich-quick real estate scheme in Wright County. Last year, four houses that he bought in Otsego -- for a combined $1.2 million -- sank into foreclosure.
Collin presses on the gas pedal, pushing his car past corn fields and grain silos, at speeds that top 70 miles per hour. "It's my way of unwinding and outrunning the guilt," said Collin, 27, a self-employed painting contractor and father of three.
In the rush to find blame for the nation's current housing crisis, the easiest targets have been the lenders and mortgage brokers who peddled predatory loans.
But across the country, from the desert suburbs of Las Vegas to the treeless subdivisions of Wright County, many homeowners face a predicament of their own making.
They gambled big that housing prices would continue to shoot up. Some bought homes as often as others buy new jeans, occasionally in return for thousands of dollars in kickbacks. These investors ranged from small-town working people looking for a quick payday to sophisticated real estate professionals who bet with other people's money, occasionally defrauding lenders in the process.
Now, with home prices falling and mortgage payments rising, panic has set in. Investors are dumping houses on the market before prices collapse further, or simply turning the keys back to the lender. That, in turn, is dragging down values for even longtime homeowners, wiping out the equity they'd built up over the years.
In Wright County, the number of unsold houses on the market has swelled to more than twice the national average. Officials estimate that up to half of all houses that have gone into foreclosure during the past year are owned by investors.
"You had people buying houses here that they have never even seen," said Dean Zachman, a sales agent for Edina Realty in St. Michael. "They took bets that, in hindsight, seem reckless."
The missing gold chandelier
There are absentee homeowners in every corner of Wright County, from Albertville to Montrose. The percentage of houses in the county classified as "non-owner-occupied," including second homes or investment properties, has grown fourfold since 2002, according to First American CoreLogic, a mortgage and real estate data company in Santa Ana, Calif.
And while lenders are left holding the unpaid loans when the investments go sour, the effect is felt across the county. In subdivisions such as Otsego Preserve, where investors owned most of the houses, homeowners have seen their values decline by up to 50 percent in the past year.
Bruce McAlpin, a real estate agent with Edina Realty in Monticello, said he was asked several months ago by a lender to evaluate a house in the early stages of foreclosure, in a new housing development called Norin Landing in Otsego. He estimates the house is worth $500,000, though an investor bought it in 2006 for $1.375 million and never lived in it. "I'm still looking for the gold chandelier, but it's not there," he said.
Many of these investors are hardly the struggling home buyers portrayed as victims of the nation's foreclosure crisis. Some lent their credit and their names to builders who simply wanted to unload their inventories of unsold houses, a scheme dubbed "builder bailout plans."
"Once regular people stopped buying houses, builders had to create their own market," McAlpin said. "They preyed on people who weren't savvy real estate investors."
Norm Imholte, a truck driver from Freeport, said a builder paid him $50,000 for agreeing to buy a $425,000 house in St. Michael. The builder told him the house would be sold within 30 days and Imholte wouldn't have to worry about making a payment.
Imholte bought a new truck with the cash, but the house never sold and has since slipped into foreclosure. He recently got a call from a state Department of Commerce official investigating mortgage fraud. "I never had any business owning a $425,000 house in Wright County," he said.
Other investors are clinging to their houses in the hope that the Wright County real estate market will bounce back to its pre-2007 peak. "I can't sell these now," said Michael Morland, who owns a trucking company and bought two houses in separate subdivisions in Otsego. "But if I can't get rid of these for a profit in five years, then I'm in trouble."
A ticket out
For Bradley and Sarah Collin, buying real estate in Wright County seemed like a ticket to a better life.
The couple and their three children, ages 2, 3 and 5, were living in a crowded trailer park in Blaine, when Bradley saw a newspaper advertisement touting real estate as the next quick way to make money.
"I didn't want to paint the rest of my life, and the trailer park scene was about as bad as parts of north Minneapolis," Bradley said.
Over a steak dinner at a Perkins restaurant, the couple met with two salesmen from Executive Premier Management Inc., a firm in Wayzata that described itself as a "property management company."
With no money down, they could buy properties in a fast-growing new subdivision in Otsego known as Otsego Preserve, near Interstate 94 and the Albertville outlet mall. They would get $5,000 in upfront cash for each house they purchased.
The Collins were also told that home values in Wright County were appreciating at 8 percent a year, much faster than the national average. At that rate, the Collins could make $24,000 a year for every $300,0000 house they bought in the county. They were told that rental income would cover their mortgage payments until the houses were sold.
Collin said the management company helped him apply for four mortgages within days of each other. The firm used a different lender each time, a way to hide from the banks the debt he was taking on and wouldn't be able to afford on his net income as a contractor, which averages about $60,000 a year. The "no documentation" and "no down payment" loans carried a much higher interest rate than conventional mortgages.
The couple purchased four houses -- each for about $300,000 -- hoping to quadruple their profits. The Collins received a $5,000 check after each closing. The cash payments were not disclosed on the mortgage statements sent to the bank, which Collin says he has since learned is illegal.
Executive Premier Management is not registered with the state, and the telephone number given to Collin no longer works. The two salespeople, Nathan Nordvik and Jonathan Matheson, do not have listed telephone numbers and could not be reached for comment.
The Collins planned to sell the houses within two years and use the proceeds to make a down payment on a dream house in the suburbs. "We had the whole investor mindset, but none of the experience and none of the knowledge," Bradley Collin said.
But the houses were rented for only eight months, and the income was never enough to cover the mortgages, Collin said. The couple, out of the trailer park and in an Andover rental, stopped making payments on the houses a year ago, and now owe more than $120,000 in back payments to the banks.
175 calls a day
Creditors hound the Collins at all hours of the day. In a single day recently, the Collins received 175 telephone calls from banks and collection agencies.
"They ask you, 'Well, do you have any family members that you can borrow from? Do you have assets like cars you can sell? What kind of TV do you have?'" he said. "It's not like I have a Lamborghini parked in the driveway that I can just sell and make everything go away."
On a recent weekday evening, Collin visited his foreclosed houses, which are now listed for $160,000 to $170,000. A pile of rubbish, including wet cardboard boxes, a stuffed animal and a blow-up kiddie pool, lay on one lawn. A pile of moldy telephone books and letters sat atop a mailbox.
The house had recently been vacated by a family that had "trashed the place," Collin said. "There was dog piss. There was rotten food. The smell was unbearable."
Collin says it will take years for him to restore his credit record to the point where he can buy a house. And the guilt of not paying his bills could linger longer still.
"All these mortgage companies are going down because of people like me who don't pay their mortgages," he said. "I'm partly responsible for that."
Glenn Howatt contributed to this story. Chris Serres • 612-673-4308