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Crisp & Cole defaults: Nightmare on Ordsall Street
Agent: Crisp & Cole took advantage of weak for gain
| Saturday, Aug 4 2007 10:55 PM
Last Updated: Saturday, Aug 4 2007 11:34 PM
Between October 2005 and the following summer, a low-level office worker at the former Crisp & Cole Real Estate company bought four homes.
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Elaine and Greg Hull stand on their front lawn in southwest Bakersfield. A defaulted Crisp & Cole property with a brown lawn is across the street.
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Together, the properties cost nearly $1.9 million.
Three are now in default. The fourth sits empty, a for-sale sign posted out front.
The office worker's estranged husband is angry.
He believes his ex never really owned the units.
"At 14 bucks an hour she can't afford any of those homes," said Gabe Stockton, a local real estate agent, of his former partner, Janie "JJ" Stockton. The couple is legally separated, court records show.
Gabe Stockton believes JJ and other employees were pressured to put their names on properties in order to make the company more money through related transactions.
"You're talking about some very professional salesmen, men with a lot of money and power, literally using people who are sometimes naive or in a weak position," Stockton said.
JJ's most expensive property was bought from Alan Cole, son of Crisp & Cole's one-time managing broker Carl Cole.
JJ paid $795,000 for a southwest home at 2010 Ordsall St. in April 2006, property records show. What Alan Cole previously paid isn't indicated.
Alan Cole said he and his father would not comment for this story. Both now work for Points West Group, where Carl Cole is managing broker.
David Crisp, a real estate salesman and former Crisp & Cole president who now operates Crisp Real Estate Inc., was not at his office Friday nor could he be reached by phone.
JJ Stockton, through Gabe Stockton, declined to comment.
Gabe Stockton, meanwhile, has been trying to sell the Ordsall Street house as a favor to JJ.
He first listed the home at $711,000, then dropped the price to $699,000.
People just drove on by, he said.
Last week, it was listed at $585,000 -- more than 26 percent lower than the sum JJ paid Alan Cole last year.
Other properties are languishing too.
As of Thursday, at least 80 homes tied to Crisp & Cole's former employees, their families, business associates and customers have defaulted since the beginning of the year, an ongoing Californian tally has found. Some have already foreclosed.
More than $40 million in primary loans and another $8.8 million in secondary loans are at risk of failure.
No other local real estate agency has so far been plagued with such a record of loss, a Californian survey of defaulted primary loans of $500,000 or more since Jan. 1 has found.
Gabe Stockton fears he could lose his job or stifle business by speaking out.
Still, he's driven to defend those left holding the bag.
"The real victims are the people, the straw buyers and the families who bought homes in those neighborhoods," Stockton said. "A lot of people are going to suffer because of this."
Cash promises
Just around the corner from JJ Stockton's Ordsall Street default is another family's Crisp & Cole nightmare.
Ed Cazares says the purchase plan proposed by David Crisp and former Tower Lending employee Jayson Costa sounded solid.
Buy the house at 1906 Heaton St., Cazares said he was told, and use a promised $65,000 cash at closing to keep up with monthly mortgage checks of $6,000.
Crisp and Costa also promised to resell the house within a year, Cazares said.
The 29-year-old plumbing business owner took the opportunity, putting the property in the name of his wife, Michelle Cazares.
They owned two other rental properties -- one a former home and the other a gift from parents -- but the Heaton Street house was their first investment purchase.
"Just the way they paint the picture for you," Cazares said. "They said they have this list of buyers who in less than a year will get it out of your name."
The couple paid $937,000 for the home in the summer of 2006, property records show.
The Heaton Street house had previously been "flipped" within Crisp & Cole.
David Crisp bought it for $459,000 in spring 2004. He later gifted it to Crisp & Cole Real Estate, which then sold it to Costa for $750,000 in December 2004, records show.
By the time the Cazareses decided to buy last summer, Costa was no longer working for Crisp & Cole.
But Ed Cazares said when he hesitated over worries the deal might be illegal, Costa brought him to David Crisp's office.
Crisp gave him his word the deal was legitimate, he said.
"I just looked at him like a movie star or something," Cazares said. "It seemed like he had everything organized."
Months later, the Cazareses fell behind making payments.
The verbally promised $65,000 didn't appear.
Costa eventually wrote them a check for $17,000, Cazares said, but the rest of the money never showed up.
The couple knew they were in trouble.
They fell behind on car payments. Mortgage checks for their other investment properties lagged.
They argued.
"I was upset with him for making the deal," Michelle Cazares said.
Ed Cazares said he approached Crisp about the money and Crisp offered to refinance the property, claiming $1.2 million comparables existed.
The couple declined and made the decision to let the property -- and Michelle's credit -- go.
"We were doing really well before," Michelle Cazares said.
The Heaton Street house was slated for public auction July 30.
The couple are catching up financially, but worry the deal will have lasting repercussions.
"I have a lot to lose," Ed Cazares said. "I have my business."
Ordsall: Pocket of decline
Even folks who never dealt directly with Crisp & Cole feel fallout in some neighborhoods where the company did heavy business.
Greg and Elaine Hull moved to the upscale Grand Island development last year, never thinking the gated neighborhood would soon be dotted by abandoned properties with brown lawns and dead trees.
"I'm livid," Elaine Hull said. "I have to look at that every morning."
Three of the 11 homes on Ordsall Street, a block-long segment amidst new development west of Buena Vista Road, are in Crisp & Cole-related default.
Front yards weave a telltale tapestry. Green grass alternates with drab, dry turf along lot lines, highlighting foreclosing properties.
"The neighborhood was clean when we moved here in April 2006," Greg Hull said. "Then the lawns started dying. Our property value has definitely gone down -- I'd say by $100,000."
Other homeowners on Ordsall are also concerned about what's happened.
"When you go for a walk, there are so many houses unoccupied," said Ravi Nandakumar, a physician who moved here in early 2004.
His tidy home sits next to a pair of defaulted properties owned by former Crisp & Cole employees.
Nandakumar has watched neighbors come and go. Most houses on his block have sold twice already, he said.
With property values falling, he plans to stay put.
"We are not moving at this point because it's very difficult to sell," he said.
Ordsall Street's empty homes have hurt property values, said Jim Beagle, a Harvard-educated farm manager who bought in December 2004.
He and wife, Robin, want to raise daughters Clara, 3, and Julia, five months -- along with the family's beagles, Penny and Camus -- in an old-fashioned neighborhood where kids play outside.
The current situation isn't what they bargained for.
"Who wants to raise their family on this street?" Jim Beagle wondered.
Phantom house appreciation
The men and women who decide how much a home is worth — for buyers, sellers and lenders — operate in a secret world.
An appraiser’s identity is confidential. So is the appraisal report.
Only the client and homebuyer, who get a copy of the report, know who determined a property’s value.
Palm Bay, Fla., appraiser Pamela Crowley wants the system to change. She runs a database logging transactions that raise red flags for appraisers.
“I would like to see a list of the people that handle (a) deal reported in public records,” Crowley said. “The names of any Realtors, real estate brokers, lenders, closing agents, name of the processor — things like that — and the name of the appraiser.”
Ted Faravelli Jr., executive director of the California Association of Real Estate Appraisers, said just a few high values could falsely inflate prices for an entire neighborhood. Such values might be issued deliberately or through incompetence, he said.
If an appraiser validates a home that sold for $550,000 but a more credible opinion is $485,000, Faravelli said, the closed sale nevertheless goes into a database of so-called “comparables” used to determine future values.
“It creates what I consider to be phantom price appreciation,” Faravelli said.
The industry is monitored by state regulators.
In California, the Office of Real Estate Appraisers licenses 19,915 appraisers and responds to complaints.
Last year, the office conducted 213 investigations that netted 78 citations, 40 referrals to the Attorney General’s office and two suspensions.
Dollars and feet
Greg and Elaine Hull worry the downturn on Ordsall Street was made worse by questionable real estate tactics that have burned honest homeowners by driving up prices the market now can’t sustain.
The couple paid slightly more than $287 a square foot for their home in late February last year, property records show.
That price is at the higher end of Ordsall Street sales and is sandwiched between Crisp & Cole-related deals.
Here are the five most expensive Ordsall homes based on cost per square foot, according to information from First American Real Estate Solutions, a firm that tracks property sales nationwide:
• $302.02, October 2005: Paid by Justin Eddleman for 1908 Ordsall. Eddleman bought the home from then-Crisp & Cole employee Jayson Costa for $704,000; Costa paid $541,000 in December 2004.
• $301.48, April 2006: Paid by Janie “JJ” Stockton, a former Crisp & Cole office worker, for 2010 Ordsall. (The transaction was recorded with the county in August.)
Stockton bought the home from Alan Cole, son of Carl Cole, for $795,000. Records don’t indicate what Alan Cole paid.
The home is now in default.
• $287.02, February 2006: The Hulls.
• $268.88, August 2005: Jerald Teixeira, then a Crisp & Cole loan officer, for 2011 Ordsall.
The home is now in default.
• $266.58, July 2005: Robinson D. Nguyen, former Crisp & Cole sales agent, for 1904 Ordsall.
The home is now in default.
At the low end of the scale is this transaction:
• $145.99, August 2004: Paid by a homeowner who bought 2002 Ordsall directly from the builder.
Fourteen months separate the lowest and highest per-square-foot sale price on Ordsall Street.
During those months, prices more than doubled.