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The gold rush that was real estate investing has slowed to a crawl and now investors in some of the more exotic investments are seeing their investments fall apart. In Indianapolis the investment group run by Mehran “Nick” Valiyi convinced people to provide the down payment and credit to purchase low income homes to be remodeled and resold with his group splitting the profits.

When environmental concerns forced the EPA to shut down the project, it unraveled and now there may be almost 500 foreclosures hitting the Indianapolis market, many with underlying lead paint issues that will have to be resolved.

Lenders and homeowners are less than thrilled and I can see many lawsuits flying around in the aftermath of this fiasco.

Hammer, in an interview, said LRTB’s internal reports show it and Cooperative Action were involved in about 490 house purchases by dozens of investors. SMC originated loans totaling about $7.8 million on 121 of those houses, Hammer said.
Cooperative Action, known as CARE, also recruited an unspecified number of investors to buy, fix and sell run-down houses in the city, Hammer said.
The houses are in neighborhoods within three miles of Downtown.
The Indianapolis real estate market already is notorious for foreclosures that chip away at the tax base. LRTB’s deal stands out because it could trigger the city’s largest wave of foreclosures.
The state’s inquiry into LRTB comes as loan problems have emerged among U.S. lenders who poured money into residential real estate purchased by low-income buyers.
This is the way the LRTB deal was supposed to work:
LRTB would arrange the purchase of a house using the name and credit of an individual buyer, who then would receive a commission of up to $2,500 from LRTB. The house would be repaired by another Valiyi company, LRTB Services. Meanwhile, LRTB would find tenants for the home and, later, a new buyer.When the house was sold, LRTB and the original investor would split the profit.

But the project fell apart. Many houses were not fixed. via the IndyStar.com.

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