February 3, 2011 at 1:00 am

Out-of-state real estate owners spark complaints from Detroit area activists

More snap up parcels to flip them, but critics say parcels often are neglected, add to blight

Within three years, this home at 14444 Mapleridge was owned by Texas and German banks, an Oklahoma firm, and three Utah firms. The house could fall into foreclosure if $7,716.37 in back taxes aren’t paid by spring. (David Coates / The Detroit News)

Detroit — Community leaders' worst fears about absentee owners profiting from the foreclosure crisis have arrived at the boarded-up doors of 14444 Mapleridge.

Built in the 1920s, the 1,400-square-foot house slipped into foreclosure in 2007 over a $90,000 mortgage. Since then, the east side home has changed hands multiple times.

A Texas bank that held the mortgage transferred the house to a German bank for $1. A year later, an Oklahoma company bought it for $500 before selling it for $1,400 to a Utah company, which flipped the home to another Utah company for $2,500.

A third Utah company, named Michigan Property Holdings II, now owns the green-and-white home that is surrounded by other vacant houses. But if the company doesn't pay $7,716.37 in back taxes this spring, the unoccupied house could fall into foreclosure again to Wayne County.

Neighborhood activists say it embodies what can happen to homes — and neighborhoods — when out-of-state owners buy cheap in Detroit and flip property for quick profits.

"Everyone is out for a quick buck," said Patricia Bosch, who runs the Nortown Community Development Corp., an east side neighborhood group. "They are not tuned in to maintaining their property. There's no life. No one comes to check on it."

She and others say they've struggled to track out-of-state owners to complain about their blighted homes. The Detroit News' efforts to reach the owners of the house on Mapleridge led only to disconnected numbers.

At Wayne County's annual tax foreclosure auction — where most bidding starts at $500 — the percentage of purchases from out-of-state buyers has nearly quadrupled to at least 15 percent in 2010 from 4 percent in 2008. Last fall, the auction was conducted online for the first time, attracting investors from Singapore and Australia to Florida and New Mexico.

The county in the last several weeks issued deeds to the new owners, but sales aren't reflected in the city assessing records reviewed recently by The News . Some fear the county's decision to auction properties online will only exacerbate blight caused by absentee owners.

"Since these speculators don't live in Detroit or Michigan or even the United States, they may be less concerned about the condition of the property because it will not impact their quality of life," said Heidi Alcock Mucherie, CEO of Community Legal Resources, a Detroit nonprofit that works with neighborhood groups. "Even if they were inclined to take good care of their property, they will be hard pressed to do so since they don't live anywhere near (it.)"The online auction attracted Edward Azar, 29, of West Palm Beach, Fla., who paid $337,619 for 248 properties. Azar, who grew up in Farmington Hills, said he bought the houses for a number of investors he wouldn't disclose.

He helps maintain a website, DetroitProgress.com, that sells homes in the city for as low as $1,500.

"Detroit is a great city and we use the slogan 'Rebuilding Detroit One Home At A Time' for a reason," said Azar, who added that confidentiality agreements bar him from discussing his business further.

Terrance Keith, who stepped down Dec. 31 as deputy county treasurer, said businesses shouldn't face barriers to investing in Detroit, and critics shouldn't assume that out-of-state firms don't have plans for properties they buy. "People out of state recognize there is significant value here," said Keith, who took another job with the county.

Business booming

One Sherman Oaks., Calif., company, Thor Real Estate, got into the real-estate business in 2008 and already is one of the largest private property owners in Detroit with more than 200 homes, city records show.

"You can't go anywhere else in the country let alone the world and purchase real estate at these prices," said Steve Ogden, executive director of the nonprofit Next-Detroit Neighborhood Initiative and former real estate developer.

"It's like a stock. Everyone buys at what is perceived at the lowest price point."

Eric Tomasi acknowledged that home prices cheaper than many used cars drew him to Detroit four years ago.

But the California investor said he is helping the city because he buys fixed-up homes and sells them on land contracts. If he didn't, the bulk of his 90 houses bought at auctions would be demolished, said Tomasi, who is in business with his wife, Sheila.

"We give the opportunity for lifelong renters to have the American dream and own their own home," he said.

"We provide a pretty good service."

The couple has bought nearly 6,000 houses in several Midwest cities, including Cleveland. Eric Tomasi said Detroit is the hottest market in the nation.

'They are not livable'

But the Tomasis face allegations that their homes are blighted ruins.

A Wyoming company, Capital Asset Recovery, sued the couple in federal court this fall alleging fraud. The suit claims the Tomasis solicited Capital Asset Recovery to buy 60 homes for $261,600, about $4,300 apiece.

The lawsuit alleged the Tomasis promised to clear titles on the land, but they had almost $103,000 in unpaid taxes and nearly $38,000 in unpaid water bills. Contrary to claims the homes would pass inspection, they needed "hundreds of thousands of dollars" to get up to code, according to the suit.

"They are not livable," said Brian Herschfus, a lawyer for the Wyoming company. "They don't have any windows.

They accuse the Tomasis of filing false documents with the Wayne County Register of Deeds that show the sale price was $1, avoiding any transfer tax.

Eric Tomasi denied the allegations and declined further comment. In a response to the suit filed in October, his attorneys said Tomasi isn't responsible for Capital Asset's losses and called some of the allegations frivolous.

Tomasi said his company takes care of its properties and has a 10-member maintenance team in Detroit to make sure they aren't blighted.

"I don't like those phone calls from neighbors," Tomasi said. "We are personally responsible, believe it or not."

Some nonprofits are mobilizing to buy more vacant houses themselves and rehab them before others can come in. Tom Goddeeris, executive director of the Grandmont Rosedale Development Corporation, said his group hopes to buy a record 50 houses this year.

"We've never had this level of vacancy in our community," Goddeeris said. "We are trying to get out in front of speculators."

Tomasi