Bankruptcy stalls foreclosure - toneighbors' dismay

By Susan Taylor Martin, Times Senior Correspondent
Published March 4, 2008

For months, the house on 18th Street NE had been the talk of St. Petersburg's upscale Harbor Isle neighborhood.

Bought in early 2007, the house sat vacant and increasingly rundown. So neighbors were pleased when a Pinellas judge issued a final judgment of foreclosure Jan. 29 and ordered the house sold at public auction on March 12.

"It certainly hasn't helped to have a deserted house next door," says Jim Weber, who hoped it would soon be in the hands of new owners who would live there and take care of it.

Those hopes are dashed for now.

Last week, the current owner filed for protection from creditors under Chapter 13 of the bankruptcy laws, a move that automatically cancels the auction and puts the foreclosure on hold. In addition, one of the owner's business partner - a convicted thief and fraudster - has leased out the house and may be able to collect rent payments for months while the bankruptcy case proceeds.

Though the circumstances are unusual, experts say this kind of scenario could become more common as foreclosure cases continue to rise.

"It sounds like what they're doing is stalling so they can collect rent," says Don Golden, a bankruptcy lawyer in Tampa.

The most recent buyer was James Conard, who had been paralyzed in a motorcycle accident and was living in an apartment for the low-income disabled. Nonetheless, Conard obtained 100 percent financing.

Mortgage companies can file a complaint with the court if fraud is suspected. "I've been waiting for that to happen more," says Golden."A lot of these 'stated-income' loans weren't legitimate and weren't always up-front and honest about what the income really was."

[Last modified March 4, 2008, 00:47:54]