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JPMorgan Chase sues to foreclose on Durham mansion

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JPMorgan Chase has slapped embattled financier Tim Durham with a mortgage-foreclosure suit, and is asking a court to order his Geist mansion sold through a sheriff’s sale.

The New York-based banking company said Durham stopped making payments this spring on a $3.5 million mortgage he took out in 2007. Because the mortgage runs 30 years, Durham had barely made a dent in the principal, despite required monthly payments of $18,329.

Tim Durham house JPMorgan Chase is seeking to foreclose on embattled financier Tim Durham's Geist mansion. (Photo courtesy Multiple Listing Service)

The suit, filed in Hamilton County last month, represents another setback for the Ohio bankruptcy trustee trying to scrape together assets for investors in Akron-based Fair Finance Co., the Durham-owned company that collapsed last year, in large part because of massive loans to Durham and other insiders.

The trustee had hoped to use proceeds from the sale of the home to repay some of the more than $200 million owed to investors—everyday Ohioans who purchased unsecured notes with interest rates as high as 9.5 percent.

But the disclosure of the $3.5 million mortgage, which JPMorgan Chase assumed in 2008 when it took over the failed Washington Mutual Bank, suggests there is little or no equity in the home.

Hamilton County property records show the home also serves as collateral on a line of credit extended by Shelby County Bank that has $1.9 million outstanding.

The loans together approximate the amount Durham has been trying to sell the home for in recent months. Durham in June listed the 10,700-square-foot residence for $5.5 million. It sits on five acres and features seven bedrooms and eight full bathrooms.

The heavy debt on the property “is one example of our disappointments as we go through and look at all the real estate” that could be sold for the benefit of investors, said Kelly Burgan, a Cleveland attorney representing bankruptcy trustee Brian Bash.

Counsel for Durham, 48, has acknowledged he owes tens of millions of dollars to Fair. But the trustee has struggled to collect on those debts because many of Durham's personal and business holdings serve as collaterial on loans to banks that have first priority for repayment.

Records filed with securities regulators show Durham used Fair like his own personal bank after buying it in 2002, with money flowing to support an ostentatious lifestyle, friends and business associates, as well as other companies he owned.

A Shelby County Bank official recently declined to discuss the institution’s loan to Durham. Records show the home is not the only collateral the bank received in return for lending to Durham.

Burgan said the best opportunity to recover money for Fair investors may come through the auction of 18 Durham automobiles and the auction of his art collection, which has about 100 pieces. Most of the cars and works of art are free of liens.

“That’s pretty much the universe of tangible, identifiable assets,” Burgan said.

The art auction, which includes works by Peter Max and other artists, is scheduled for Oct. 16 in Cleveland. The car collection, which includes a Lamborghini and many other high-end rides, is being sold gradually at specialty auctions.

Durham has denied doing anything wrong. His attorneys say in court filings that Fair Finance provided prospective purchasers of Fair's investment certificates offering circulars that disclosed insider loans and other risks.

However, investigators are trying to build a case that Durham duped investors. In a court filing late last year, the U.S. Attorney’s Office in Indianapolis alleged Durham was operating a Ponzi scheme, using money from the sale of new investment certificates to pay off prior purchasers.
 

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  • re
    I don't know, maybe someone can pull the sites Morrison spends accessing on his work and more importantly personal computers so we can see exactly what he does with his time.

    As for Durwood et al he ain't out of the woods. Be patient, you'll be pleasantly surprised at what might be happening to him and certain of his friends on a judicial basis in the very near future.
  • Tim Morrison
    There has to be a bigger political scandal here. Is Morrison that big of an idiot that he can't go after Durham and Brizzi? Or is he covering up for political reasons?

    And Durham deserves all of this. That guy is the most arrogant, lying s.o.b I've ever met. And I hope Brizzi gets what he deserves.
    • The answre to your question, USC
      The answer to your question, oh Fair USC, is because Timothy Morrison, our lovely US Attorney, decided to retract his emergency motion to freeze Durwood's assets, allowing him to continue 1) paying lawyers with stolen money--and only the best lawyers might I add; 2)continue his egregiously lavish lifestyle in his newest abode, which by the way had an original listing of $100k/month rent, despite the fact that four years ago he purchased 1227 Sierra Alta down the street (and according to LA County records still owns it)for $4M--and allow his mooch girlfriend he had on the Fair payroll and her parents and anyone else that apparently feels like it to live in the rented mansion along with him and those National Lampoon posters he has decorating the walls (money does NOT buy taste); and 3) because the trustee is unable to bring himself to call Tim's new landlord to find out how exactly he is paying that rent.

      Would someone please suggest to the JP Morgan people to have Tim criminally charged with mortgage fraud because we all know he did not tell the truth on any of his mortgage applications and it doesn't appear anything is ever going to get done in Indianapolis while the other Tim is at the helm of the federal criminal justice ladder.

      Ouija is just sayin~
    • Financier?
      Why do you in the media nearly always refer to guys like Durham, Marcus Schrecker, Bernie Madoff, et al as financiers? Wouldn't alleged embezzlers or accused swindlers be more accurate? In Madoff's case it would be proven guilty swindler. These aren't financiers, they're charlatans.
    • Let Me Clarify
      For those unfamiliar with these type of loans, the option period was typically the first 12 months. After that time period, the loan would convert to a fixed rate, with all accrued interest rolled into the principal.

      Just out of curiousity, I checked, and using those figures, $3.5M, 30yr, $18k mo payment, that gives an interest rate of 4.75%. That's pretty sweet for a super-jumbo.
    • LA properties?
      Can anybody answer a basic question, why is TD allowed to stay in his various properties in LA? Is he late on those properties? How long can TD hide behind the Bush/Servaas relationship. Maybe he should look for another investment like Brightpoint. Isn't the Laikin at Brightpoint related to TD's business associate Laikin who just got sentenced to jail. I'm just saying. More Luda juice and Cristal for everybody!!!!
    • I bet you are wrong
      since the facts listed ($3.5M, 30 year, $18k mo. pmt, some principle paid off) suggest a typical 30-year mortgage loan.
    • WaMu Loan
      I bet that WaMU loan was one of those reverse amortizing option payments deals where he could pay less than the interest due each month, and they just added the extra to the principal. I also bet the probably now unemployed mortgage broker that put that loan together got a sweet commission on it.

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