Business that helped those in foreclosure files for Chapter 11

ALBANY — Geoffrey Goldman portrayed himself as a savior in the foreclosure crisis. He made a living by buying homes from cash-strapped owners so that they wouldn’t be evicted during foreclosure and could even buy the properties back under leaseback agreements.

“We’re helping more people than ever,” Goldman said in an April 2007 news release.

Now Goldman is the one in need of help.

Two of Goldman’s real estate leaseback businesses in Albany on Tuesday filed for Chapter 11 reorganization in U.S. Bankruptcy Court. His Rivertown Investments and its real estate holding company, Momentum Properties, have recently closed after falling victim to downturns in the housing and credit markets, according to documents filed with the Albany court.

“The purpose of the bankruptcy is to facilitate the liquidation of [the] debtor’s real estate holdings,” Rivertown attorney Justin Heller said in a court motion.

It’s unclear how the bankruptcy filing will affect the leaseback agreements and whether the liquidations will result in tenants being forced from their homes. Momentum cited $14.9 million in assets and $16.3 million in liabilities.

Rivertown lists in its Chapter 11 petition more than 40 leaseback agreements in New York, New Jersey and Pennsylvania. The deals included a dozen properties in the greater Capital Region.

“That just put a pit in my stomach,” Empire Justice Center senior staff attorney Kirsten Keefe said after learning the breadth of Rivertown’s real estate reach.

Goldman also ran a company named Rivertown Financial, which appears to be the public operating name for Rivertown Investments. Under Rivertown’s leaseback program, according to the 2007 Rivertown Financial news release, homeowners sold their homes to the Albany firm because they were on the verge of foreclosure or too far behind on payments to reinstate their mortgages.

Sellers used proceeds from the sale to pay off their mortgages. Sellers then made rental payments to Rivertown so they could continue living in their houses, which they ultimately sought to buy back.

To buy the distressed properties, Momentum obtained mortgages from banks such as Citimortgage and Countrywide Home Loans, who are now secured creditors in the bankruptcy case. Highlighting Momentum’s financial woes, its bankruptcy petition lists eight homes in foreclosure, four in the greater Capital Region, according to court documents.

Keefe, a predatory lending specialist, said Momentum might encounter difficulties in liquidating its real estate holdings. Housing sales in the greater Capital Region are down 15 percent for the first 10 months of this year.

Keefe said the fate of Rivertown’s tenants depends on the terms of their lease agreements and whether they are on a month-to-month or long-term basis. New buyers would likely have to honor the long-term leases, affording tenants at least some extra time in their homes.

“That’s so sad. I want to cry,” Keefe said.

In 2002, Goldman founded Rivertown in Nyack. It later moved its headquarters to Albany, and between 2005 and last year its work force grew from three to 15.

Heller, Rivertown’s attorney, could not be reached for comment.

Rivertown’s revenues this year fell to $1.68 million, compared with $2.51 million in 2007 and $2.03 million in 2006. Rivertown Investments, the business’ operating arm, cited $721,500 in assets and $154,500 in liabilities.

New York lawmakers drove many leaseback real estate firms out of the state with passage of the Home Equity Theft Protection Act, which took effect in February 2007.

The law targets foreclosure rescue scams in which scammers evict sellers after acquiring real estate titles. It also provides protections against bait-and-switch deals in which scammers tell homeowners to sign papers that purportedly refinance a loan but actually sign over the deed to their house.

There was no indication Thursday that Rivertown has violated the law.

The home equity act requires parties to make a written contract detailing terms of the title transfer and provides sellers a two-year extended right to cancel the deal for violations of the law. Also, title-acquiring parties must pay owners at least 82 percent of the property’s fair-market value.

Momentum’s Chapter 11 petition lists 26 mortgages dated after the law’s enactment, with the most recent loan being made in March for a Saugerties home.