A mortgage rescue firm that collapsed last summer will find no savior in bankruptcy court, dimming hopes that dozens of Northeast residents who entered lease buy-back agreements will be able to keep their homes.
U.S. Bankruptcy Court Judge Robert Littlefield on Thursday dismissed the month-old Chapter 11 cases for Rivertown Investments in Albany and its real estate holding company called Momentum Properties. Last week’s dismissal was prompted by a request from U.S. Trustee Kevin Purcell, who accused Rivertown owner Geoffrey Goldman of “systematic gross mismanagement.”
Purcell earlier this month issued a laundry list of reasons for why Rivertown should not receive bankruptcy protection. They included Goldman’s decision to let the wife live rent-free in a home Momentum owns in Ridgewood, N.J. and his acceptance of rental payments from another tenant through his personal Pay Pal account. The trustee also criticized Rivertown for improperly recording deeds transactions and posing a “significant risk to the public and estate” because the company’s properties lack insurance.
Rivertown, which ceased operating in August after falling victim to the housing slump and credit crisis, last month filed for Chapter 11. The company intended to use the bankruptcy system to facilitate the re-sale of homes to people who sold those properties to Rivertown and continued living in them as tenants.
Since 2002, Rivertown had offered the lease buy-back agreements, which it said afforded homeowners the time to reorganize their financial affairs so they could ultimately buy back their homes. Goldman founded Rivertown in Nyack, but he later moved the business to Albany.
However, it is not clear whether those tenants are in a position to complete those transactions or if mortgage holders, such as Citimortgage and Countrywide Home Loans, will be willing to work with them. Even Rivertown attorney Justin Heller acknowledged the difficulties Rivertown would have faced in negotiating mortgage deals with national banks, though he remained hopeful some tenants could strike deals for their homes.
“It would have forced the mortgage holders into the process,” Heller said of the Chapter 11 case.
In its Chapter 11 petition, Rivertown listed over 40 lease buy-back agreements in New York, New Jersey and Pennsylvania, including a dozen properties in the greater Capital Region.
In a court motion, Purcell said the liquidation of Rivertown and Momentum would likely only pay secured creditors and some real estate taxes. In their Chapter 11 petitions, the companies cited an aggregate $15.6 million in assets and $16.3 million in debts.