For whatever reason, Andrew Valerio didn’t think much of it when instead of handing him keys to the house, his new landlord gave him a power drill to remove the lock on the front door.
Perhaps it was because Valerio was anxious for his family to move into a more spacious house on a quieter block. Or it could have been that he wanted to get the move over with, because he knew he had so much work ahead of him.
“When we got in here, it was a shell,” Valerio said. “Nothing in here. There were walls. That was it.”
He began by shoveling the debris and remnants of the fallen ceiling out of the living room so his family could walk through it to get to the kitchen, which was in even worse shape. For weeks, Valerio drove to Home Depot on Aramingo Avenue after work to get supplies to fix up the house. Along with his wife and their son, he slept on the floor of the house next to a space heater every night until they could get the house’s heating system fixed. It took awhile to get to that, because the house needed ceilings and plumbing first. As their new landlords had made clear, all of these repairs were the family’s responsibility.
The Valerios had rented the property from a company called Landvest, which was run by a now-infamous local real estate investor named Robert N. Coyle, Sr.
“At first he was good,” Valerio said. “We thought he was a good landlord, until we got a notice on the door about a sheriff’s sale. And then we found out he’d done all that crazy stuff.”
Suddenly, the family faced the very realistic possibility of being evicted from a house they had spent considerable time and money fixing up, with no hope of being reimbursed. They weren’t the only ones.
As a series of articles in the Philadelphia Daily News revealed in late 2009, Coyle, a self-made millionaire who owned over 300 properties in Kensington and Port Richmond, had been accused of forging rental licenses to evict tenants, defaulting on multi-million dollar loans and scamming low-income families with rent-to-own promises that would never materialize.
When the country’s real estate boom turned into a bust, Coyle’s empire began crumbling, leading to foreclosures, evictions and a nightmare scenario for hundreds of shocked and confused tenants. Landvest’s headquarters has remained shuttered since the Philadelphia District Attorney’s office raided the office in August 2008. Coyle is currently under investigation by local and federal authorities and faces numerous lawsuits from former tenants.
The Valerios were among the few lucky ones.
After Coyle began defaulting on his loans, ownership of the Valerios’ house was transferred to East River Bank, one of several banks from whom he had borrowed a total of $15 million. The Valerios got in touch with a representative from the bank who repeatedly assured them that they were not in danger of being evicted and began working with the couple on a long-term resolution. Even though the Valerios were not originally promised a rent-to-own agreement, when the conversation with the banks turned to the possibility of buying the house, their interest was piqued.
A few months after visiting East River Bank’s office to fill out the required paperwork, the Valerios were notified that they had made settlement and would soon be homeowners.
“She cried,” said Valerio, referring his wife, Edna. “She’s 57 years old. It’s her first house that she owned. And I’m happy for her because I’m her husband and I try to do the best I can for her.”
Unlike the other banks who have taken on Landvest properties, East River Bank was willing to work out a special arrangement whereby the tenants are treated as non-traditional borrowers and despite less-than-pristine credit scores, are offered the house for a price that’s financially reasonable for all parties involved.
So far, about a dozen Landvest victims have achieved homeownership through such an arrangement with East River Bank. Tenants whose houses have been taken over by other lenders, however, face more daunting odds.
“The other banks seem to want to get all of the properties off their books at one time and to do that, they need to find an investor,” said Jennifer Schultz, a lawyer at Community Legal Services (CLS) in North Philadelphia, which has been representing many Landvest victims.
Rather than sell the homes individually, explained Schultz, the banks are hoping to maximize profit and expedite the process by selling off the Landvest properties in bulk, quite possibly to another slumlord.
“It’s very frustrating because the prices that are getting tossed around are prices that some of our clients could actually tender through the savings that they have at this point,” said Schultz. “The banks seem to be willing to take a major loss on the price per property to [sell them in bulk] but they’re not willing to give our clients that same price, because they want to resolve this as one package deal.”
In effect, the strategy being employed by the banks could very well leave many tenants – and the neighborhood – in a state not unlike the one they’re in today.
In trying to convince the banks to try out an alternative strategy, Schultz and the other lawyers at CLS have been able to tout the example of the Valerios, who have now owned their home for 14 months.
“My mortgage is first,” Valerio said. “ If my electric or gas gets shut off, I don’t care. My mortgage is first. That keeps the roof over your head. You can deal with the electric and the gas and the water. [If you don’t pay your] mortgage, they could put a foreclosure on you and you lose the whole entire thing.”
As long as those payments are made, the Valerios will continue to avoid a fate akin to that of the majority of Landvest tenants, many of whom are currently facing the imminent possibility of a sheriff’s sale.
Two batches of Landvest properties were scheduled to be auctioned off last month, but both were postponed, one by court order and the other due to a unilateral action taken by the bank. The batch of properties owned by Pennsylvania Business Bank is due to go to sheriff’s sale in May and the other batch, owned by First Republic, is scheduled for June.
In a strange way, Landvest’s earlier conduct has served as a temporary blessing in disguise for some tenants. Many of Coyle’s former properties have unpaid property taxes and utility bills that will need to be taken care of before the mortgage can be sold to another owner. These “upset costs” number in the hundreds of thousands of dollars in some cases. For banks with those kind of payments due, it’s sometimes easier to delay the sheriff’s sale than to move forward with it.
For anxious tenants, these delays might buy them an extra month or two, but they ultimately face a grave uncertainty about the future, especially those who have invested substantial amounts of their own money into the property.
For Andrew Valerio and his family, that same type of uncertainty has given way to a sense of pride and a peace of mind that seemed impossible a few short years ago.
“I got my home, got my wife, got my child,” Valerio said. “That’s all I need. And I’m happy.”