Posted By Watchdog Staff On May 27, 2015 @ 4:00 am
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UNREAL ESTATE: Before the crash that she blamed on speculators, Senator Elizabeth Warren made a bundle by flipping houses.
By Jillian Kay Melchior and Eliana Johnson | Special to Watchdog.org
Nearly two years after Veo Vessels died, her daughter, 70-year-old Mary Frances Hickman, decided to sell the home her mother had left to her. A sprawling brick house in Oklahoma City’s historic Highland Park neighborhood, it was built in 1924, just a year after Mary’s birth.
Even now, decades later, one of Vessels’ great-grandchildren fondly recalls the wood and tile floors, the fish pond, the butler’s quarters, and the multi-car garage where children played house.
“It was really, really nice,” says Hickman’s granddaughter, Andrea Martin. That’s part of the reason she’s so surprised her grandmother sold the home in 1993 for a mere $30,000. Despite a debilitating stroke, Martin says Hickman remained sharp, and she had always been business-savvy. As an Avon saleswoman, she had at times ranked among the top ten in the country. “So I don’t know why,” Martin says. “Maybe she just wanted out from underneath it, but to sell it for such a low number — I don’t know. Maybe she got bad advice, maybe she was just tired.”
The home’s new owner: Elizabeth Warren, today a Massachusetts senator who has built a political career on denouncing the sort of banking titans and financial sophisticates who make a buck off the little guy. Five months after purchasing Veo Vessels’ old home, Warren flipped the property, selling it for $115,000 more than she’d paid, according to Oklahoma County Property Assessor records.
Warren rose to political prominence in the wake of the 2008 financial crisis as a crusader against big banks and a dispenser of common-sense economic advice. She campaigned for the creation of the Consumer Financial Protection Bureau, intended to shield people from the predations of the mortgage and credit-card industries, among others. In her 2006 book All Your Worth, co-authored with her daughter, Amelia, Warren lists as a top myth [2] the idea that “you can make big money buying houses and flipping them quickly.” She has made a career out of telling people how to behave in financially responsible ways, and out of creating laws that will make it illegal for them to do otherwise.
But Warren bought and sold at least five properties for profit at a different time in her life, before the cratering economy and a political career made her a star. Her life story has been the subject of much interest, and her 2014 memoir, A Fighting Chance [3], chronicled her rise from humble beginnings in small-town Oklahoma and her struggle to make ends meet. It didn’t much mention, though, the early 1990s, years when her children were teenagers and she was once again happily married. These are years when she wasn’t yet the multimillionaire she is today, and, she has said, she was voting Republican.
As a professor of law at the University of Pennsylvania, and later as a visiting professor at Harvard Law School, she was doing well for herself, building both her professional profile and her wealth. She owes at least part of her considerable financial success, it seems, to snapping up these properties in her native Oklahoma and turning them for a profit – though today that’s not a practice she endorses for the many people looking to emulate her success.
(By our deadline, Warren’s office did not respond to our request for an interview with the senator or for a request for comment from the senator’s spokesperson for Warren about the home sales.)
Hickman’s granddaughter Martin says of the home flip: “I don’t think it’s right, but I don’t really know much about it …. You flip houses to make a profit, so I can’t really fault [Warren] much. I think my grandmother made a mistake by selling it for so cheap …. She had worked hard all her life and was a self-made woman.”
Don Vessels — a grandson of Veo Vessels, and the nephew of Mary Frances Hickman — said he had not known that Warren had purchased the family home, but “my reaction is that it’s kind of par for the course.” He added: “What’s said and what’s done in politics are two different things. Mary Hickman, being the executor of the estate, should have sold it for the highest price on the market, which I’m not sure she did. But the house was not in fantastic shape, I can tell you that. It was a very nice house when it was purchased, but my grandmother kind of let it fall into disrepair.”
Records show Warren bought the house Hickman inherited from her mother, located at 200 N.W. 16th Street, in August 1993 and quickly obtained permits to do plumbing and electrical work, selling it five months later for a 383 percent gain.
House flipping is commonly defined as the practice of buying and selling a home within six months, as the future senator did with the Hickman property. Warren held onto at least four other properties for longer periods, sometimes waiting a year before relinquishing ownership and, at other times, as long as seven years.
Warren bought two homes after they’d fallen into foreclosure. And though she spent money fixing up the Hickman home before selling it, records suggest she sold others at a significant profit without making any meaningful upgrades.
In 1993, Warren bought a foreclosed property on N.W. 14th Street in Oklahoma City for $4,000. National Review attempted to contact the couple who had owned it. No phone number or email could be found on record for them, and they did not respond to a letter mailed to their last known address, in Colorado. No public records could be found elaborating on the events that led to the foreclosure of their home.
In 2004, Warren transferred the home to her brother, John Herring, and his wife, who sold it for $30,000 in 2006, a 650 percent increase over what Warren initially paid for it. Neither Warren nor her brother filed any permits to make improvements.
In June 1993, Warren bought another foreclosed property in Oklahoma City, this one on West Wilshire Boulevard, for $61,000 from the Department of Housing and Urban Development. Because properties purchased from HUD are sold as is, and because foreclosed homes can have damage ranging from simple poor upkeep to stripped copper, “the only reason you do that is for profit,” says Steve Stout, residential field supervisor at the Oklahoma County Assessor’s Office.
On the national stage, Warren has been outspoken about the dangers of home foreclosure. In a 2002 book, The Fragile Middle Class, co-authored with Teresa Sullivan and Jay Lawrence Westerbrook, she wrote that foreclosures are “notorious for fetching low prices.” And as a professor at Harvard Law School, in the wake of the financial crisis, Warren served as a member of the congressional panel overseeing the Troubled Asset Relief Program.
The panel produced, among other things, a report [4] on the foreclosures taking place across the country. It began with a paean to the place of the home in American life: “Foreclosures are about the home,” it said, which is “the physical and emotional nexus of many households as well as the centerpiece of many Americans’ finances.” Foreclosures, it concluded, “can harm other homeowners both by encouraging additional foreclosures and by reducing home sale prices, while decreased property values hurt local businesses and reduce state and local tax revenues.”
A year after buying the foreclosed property on West Wilshire Boulevard, Warren also bought the house next door for $72,000. Despite filing no building permits to renovate at either property, Warren pocketed $34,000 in profits when she sold the first house in December 1994, and she and her husband, Bruce Mann, made an additional $32,000 when they sold the one next door in 1998.
That same year, Warren sold another home she and Mann owned for a sizeable profit. The couple had purchased the property, at 4721 Dove Tree Lane, in 1991, filing permits for mechanical and plumbing repairs, according to Oklahoma County Assessor’s Office records.
“We’re talking about more than just painting or minor repairs,” says Stout, adding that it could add up to tens of thousands of dollars. “It’s serious work.” Still, the investment seems to have paid off: Warren and her husband paid only $50,000 for the house and sold it for $109,500, a 119 percent gain.
The profits from these flipped homes adds up. Even excluding the property sold by her brother, Warren and her husband have made at least $240,500 flipping homes, not counting the unknown sum they invested in remodeling. In her 2014 autobiography, Warren wrote of the events that precipitated the financial crisis that “everyone seemed to have a story about someone they knew who was getting rich by flipping houses.”
She omitted a crucial one.
This article first appeared in National Review. Eliana Johnson is Washington editor for National Review. Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center, and she is also a senior fellow at the Independent Women’s Forum.
Elizabeth Warren helped family flip wigwams for heap big wampum
Yes dear WizBang readers, it’s time to pick on Big Chief Paleface again. The Boston Heraldis reporting:
Elizabeth Warren, who has railed against predatory banks and heartless foreclosures, took part in about a dozen Oklahoma real estate deals that netted her and her family hefty profits through maneuvers such as “flipping” properties, records show.A Herald review has found that the Democratic U.S. Senate candidate rapidly bought and sold homes herself, loaned money at high interest rates to relatives and purchased foreclosed properties at bargain prices.Land records from Warren’s native Oklahoma City show the Harvard professor was active in the often topsy-turvy real estate market in the 1990s, including:• Purchasing a foreclosed home at 2725 West Wilshire Boulevard from the U.S. Department of Housing and Urban Development for $61,000 in June 1993, then selling it in December 1994 for $95,000 — a 56 percent mark-up in just 18 months.• Buying a house at 200 NW 16th St. for $30,000 in August 1993, then flipping it for $145,000 — a 383 percent gain after just five months.• Lending one of her brothers money at 9.5 percent interest to buy a home at 1425 Classen Drive for $35,000 in August 2000. He sold the place three months later for $38,500 — a 10 percent gain in 75 days.• Providing her brother with financing to buy a $25,000 house at 4301 NW 16th St. in 1994. He sold the property four years later for $42,000, a 68 percent increase.… Herald columnist Howie Carr reported yesterday that Warren and her relatives also profited from two additional Oklahoma City foreclosures — in both cases showing triple-digit percentage gains.Warren’s campaign issued a statement last night: “Elizabeth and (her husband) Bruce are fortunate to be in a position where they can help their family. They have been able to help relatives buy their homes and her nephew — a contractor — fix up houses.”
I’m not one to criticize someone for taking advantage of a good deal when they find it. As a resident of Oklahoma City I can tell you that Warren and her family shrewdly bought bargain homes in parts of town that were popular transition areas (older/retired homeowners selling smaller 1950’s era homes to young first-time buyers) that saw a lot of market activity ten to twenty years ago. And the house in Mesta Park (200 NW 16th), which is a neighborhood of stately two story WWI era homes that sell today in the $200 – $300k range, was an incredible find. I’m also pretty certain that buying the house so cheaply meant it was in pretty bad shape, therefore a lot of the sales price went to cover the cost of renovation.
But there is something not quite right about an advocate for fair and affordable housing taking low-priced homes off the market and then reselling them at a substantially increased price. This helps put thousands of dollars in Elizabeth Warren’s pocket, but it how does it help lower income first-time home buyers looking for an affordable property that they can buy, repair, and use as a means to invest and build equity wealth? Likewise with foreclosure homes, which generally involve a significant financial loss for the foreclosed homeowner. Should a critic of “predatory lending” and “dangerous mortgages” be profiting from the resale of foreclosure homes?
And look at the deal for 1425 Classen Drive. It’s a two bedroom condo in a multi-unit townhouse style building. The fact that the purchase and sales dates, and purchase and sales prices, of the property are so close together tells me that her brother was likely forced into a quick sale. Probably the place was resold “as-is” or with little more than a new coat of paint. If her brother enlisted the help of a licensed real estate agent, then he would have been responsible for paying their commission out of the sales proceeds. If you factor in the 9.5% interest rate Warren charged her brother, it is very likely that he could have actually lost money on the deal. But as a lender, Warren of course made money.
As I’ve said before, I have no doubt that Elizabeth Warren is genuinely concerned about the institutionalized or systemic disadvantages borne by America’s low income families. But she has chosen to make her mark on the political world by attacking wealthy entrepreneurs and the financial industry. That’s a rather tricky position for someone who has managed to earn a million-dollar fortune for herself, with much of it apparently derived from practices that she now preaches against on the campaign trail.
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