Geoffrey Goldman over the past two years portrayed himself as a savior in the foreclosure crisis. He made a living by buying homes from cash-strapped owners who wouldn’t be kicked out after sales closed and could even buy the properties back under leaseback agreements.
“We’re helping more people than ever,” Goldman said in an April 2007 press release.
Now Goldman is in need of help. Two of his real estate leaseback businesses filed Tuesday for Chapter 11 reorganization in U.S. Bankruptcy Court. His Rivertown Investments and its real estate holding company, Momentum Properties, recently closed after falling victim to downturns in the housing and credit markets, according to documents filed with the Albany court.
Rivertown Investments cited $721,500 in assets and $154,500 in liabilities.
“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. He could not be reached today.
The liquidation of those assets could cast into limbo the former homeowners who entered leaseback agreements with Rivertown. Rivertown lists in its Chapter 11 petition more than 40 leaseback agreements in New York, New Jersey and Pennsylvania.
“That just put a pit in my stomach,” Empire Justice Center Senior staff attorney Kirsten Keefe said after learning the extent of Rivertown’s holdings.
Goldman also ran a company called Rivertown Financial, which appears to be the public operating name for Rivertown Investments.
Under Rivertown’s leaseback program, according to the 2007 press release, homeowners sold their homes 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, then made rental payments to Rivertown so they could continue living in their homes, which they ultimately hoped to buy back.
To buy the distressed properties, Momentum took out mortgages from banks such as Citimortgage and Countrywide Home Loans, which are now secured creditors in the bankruptcy case. Momentum will attempt to sell its real estate holdings to pay off its $16.3 million in liabilities, according to court documents.
Keefe, a predatory lending specialist, said Momentum might encounter difficulties in liquidating its real estate portfolio due to the housing slump. Housing sales in the greater Capital Region are down 15 percent for the first 10 months of 2008.
Keefe said the fate of Rivertown’s tenants depends on the terms of their leases and whether they are on month-to-month or long-term agreements. 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 but later moved its headquarters to Albany. Between 2005 and 2007, its workforce grew from three to 15.
Rivertown’s revenues this year fell to $1.68 million, compared to $2.51 million in 2007 and $2.03 million in 2006.