And the Prize for Most Unusual Foreclosure Rescue Plan Goes to…
By Gerri L. Elder
Times are really getting tough. More and more Americans are facing foreclosure on their homes every day. The problem has reached epidemic proportions and the dire situation has lawmakers and desperate homeowners alike searching for solutions.
Mortgage brokers are also suffering, with many who previously worked with subprime lenders finding themselves out of work. It seems that the subprime lending boom has ended with a heavy thud, and these mortgage brokers have worked themselves right out of jobs while setting millions of homeowners up for foreclosure disaster.
Most people are looking for legal ways to save their property, but a New York couple took it a bit further. Two homeowners in New Rochelle allegedly converted their property into a brothel to raise the necessary cash to keep the house out of foreclosure. They had bought another home which they had hoped to renovate, but thanks to the stalled housing market, ended up with two mortgages and a home they couldn’t afford to renovate. So these cunning business people made plans to get their hands on the extra cash they needed. It was an illegal plan, but hey, any port in a storm.
The couple reportedly advertised the grand opening of their brothel with an online posting on Craig’s List and a red ribbon placed outside by the road. Undercover police showed up at the spacious 3-bedroom house for the grand opening special, which the ad said was to include dominatrix services. The homeowners and four women ranging in age from 21 to 30 years old were arrested when police raided the home. The four women were charged with prostitution and practicing massage without a license.
After the sting, homeowners Richard Werner and Heather Mezzenga were charged with promoting prostitution. Werner and Mezzenga work as mortgage brokers and had moved out of the house-turned-brothel approximately two years ago to the new home that they planned to renovate.
The brothel-home had been put up for sale with an original listing price of $750,000 and when it didn’t sell the price was dropped to $600,000. When couple still couldn’t find a buyer for the property they used it as a rental property to try to get some income from it to pay the mortgage payments. Renters came and went and the condition of the house went downhill.
Then in late August, it seemed that some new occupants had arrived at the house. Neighbors noticed that the lawn was finally cut and that heavy shades were put on the windows. The new occupants though, were strangely never around in the daytime. During the night though, there was reportedly a lot of activity at the house with many cars parked at the residence.
People in New Rochelle who know the couple were shocked to learn that they had allegedly become involved with prostitution. There is much speculation that the recent tightening in the mortgage business and the housing market slump has caused them severe financial problems and that is what led to the brothel opening. I’m sure paying two large monthly mortgage payments didn’t help their financial situation either.
Both homeowners, as well as the four alleged prostitutes have made bail and have been released from jail but will appear in court to face the charges against them.
Unless the homeowners have some kind of backup plan in mind, the property will almost certainly face foreclosure.However, given that the brothel idea was their first choice for fund-raising, I'm sure whatever their second choice would be is not a recommended solution to avoid foreclosure. Perhaps they should consider a legal solution next time, such as a Chapter 13 bankruptcy.