Six immigrants who were prequalified for huge mortgages are suing Bellevue Towers and JP Morgan Chase Bank after they lost a combined $174,050 in earnest money. They allege the preferred lender put down false numbers for their income, which made it possible to prequalify but not to qualify for the actual loan, resulting in the loss of their earnest money.
Seattle Times staff reporter
When Uzbek hot-dog vendor Danil Kasimov thought of America, he thought of the place portrayed in movies — a Land of Plenty where anyone’s dreams could come true.
In 2000, he emigrated to the U.S., settled in Redmond and became a limousine driver, earning little more than minimum wage.
Two years ago, a real-estate agent suggested he consider purchasing a condominium at the luxurious Bellevue Towers. To Kasimov, it seemed his vision of America was unfolding with the ease of the touch-screen showing eventual views from his dream condo on the 32nd floor.
Delighted that he prequalified for a $1.5 million condo on his $20,000-a-year income, he put down more than $75,000 in earnest money he borrowed from a friend.
But that money — and nearly $100,000 from five other prospective condo buyers — soon evaporated. The six filed a lawsuit in King County Superior Court this week against Bellevue Towers and JP Morgan Chase Bank, alleging the lender falsified documents, making it possible for them to prequalify for loans they could never actually get.
In one case, the lawsuit says, a Chase broker listed a prospective buyer’s income not at the actual $2,147 a month, but at $12,500. Chase’s underwriter "red flagged" the document as suspicious, the suit alleges, but the applicant still was prequalified for a $724,000 condo.
Jim Robinson, the prospective buyers’ attorney, says the sellers risked nothing because of a 2005 state law that allows property owners to keep earnest money without proving they were damaged.
Robinson, who is working pro bono, says that law allows buyers who should never have been "prequalified" for loans to put earnest money down that they are sure to lose when they fail to qualify for the actual loan.
The Legislature has created a means for developers "to grab their earnest money, and that is shocking. … If you take that law and combine it with a lousy real-estate market, guess what happens? You’ve got developers running around trying to grab people’s earnest money," Robinson said. "It’s going on all over the state."
The lawsuit filed Wednesday caught Bellevue Towers staff and others by surprise. Patrick Clark, a principal at Realty Trust, which markets the complex, said Thursday, "We have no interest in selling a home to somebody who isn’t qualified to purchase it."
He added that "it’s a very difficult market, and (buyers) will make any sort of argument they’d like to get money back, but the contract is the contract."
The Chase broker could not be reached for comment. Her former supervisor declined to comment Thursday night.
Bellevue Towers held its grand opening Thursday, celebrating completion of its first 22 floors. The rest is scheduled to be completed by June.
Just east of Bellevue Square, it’s an architectural dream, with twin towers rising an eventual 42 and 43 stories, making it the tallest residential building in the Northwest when it is complete. Of the 539 condos, 180 have been sold, the marketing department says. The number does not include those who backed out or forfeited their earnest money. According to King County records, about 12 sales have closed. The units sell from $500,000 to more than $9 million each.
In 2007, Kasimov borrowed $75,700 from a friend to put 5 percent earnest money down on a Bellevue Towers condo. Financing 95 percent, the new home would have cost him more than $7,000 a month, including monthly dues.
Bellevue Towers’ preferred lender is JP Morgan Chase, which had an office in the same space as the condo model.
"I normally wouldn’t think I could afford this," Kasimov said. "But there was all this excitement … Hollywood all over the place." He says he was told there were only a few units left, and the real-estate agent, knowing what Kasimov did for a living and that it was his first purchase, said, "Let’s see if they’ll approve you."
Kasimov said that when he asked if he could afford the condo, the agent told him: "Let the bank worry about it."
Kasimov said a Bellevue Towers agent led him to a Chase senior mortgage banker/broker. While he had the option of going with other lenders, Chase being the preferred lender meant he would get a better deal, he said the agent told him. Kasimov signed the contract with Chase, but buried in the middle was language indicating that the lender could increase the required earnest money to 25 percent even after accepting the 5 percent, Robinson said. And, he said, that’s what happened.
Kasimov couldn’t raise the extra cash and lost what he’d already put up.
Other plaintiffs are Kasimov’s wife, Diana Shakhnazaryan, who was not married to him at the time, and her mother, Svetlana Kocharyan, both of whom fled Azerbaijan and gained political asylum here about 10 years ago. In 2006, Kocharyan worked on an assembly line and her daughter had a part-time job washing hair in a Kirkland beauty salon. Together, they made $3,659 a month, court documents say.
Chase prequalified them for a 95 percent mortgage for the purchase of a $922,600 condominium, giving them a $7,198 monthly payment, including condo dues.
Standard loan underwriting criteria require a debt-to-adjusted-gross-income ratio of less than 45 percent, which means that the women would have had to have "an adjusted gross income of $16,000 a month," the lawsuit says. Since they clearly did not, and say they were never given a copy of the contract — which was written in English, a language they didn’t understand — they allege that the broker put down false numbers making it possible for them to prequalify.
Kasimov and the other plaintiffs, Yuri and Dora Aleksandrov and Davud Kasparov, none of whom are fluent in English, make the same allegations in the suit.
In Kasparov’s case, he was a student with an income of $3,600 a year and says he was told he prequalified for a $634,000 condominium.
Court documents say the Aleksandrovs put down $36,000 in earnest money — from refinancing their home — on a $724,000 condominium for which they were told they prequalified. The Aleksandrovs have a copy of their contract and noticed that the Chase broker listed Dora Aleksandrov’s income as a hairstylist not at the actual $2,147 a month, but at $12,500. Chase’s underwriter "red flagged" the document and, the suit says, wrote "income … appears high for area and time in line of work" and wondered if she worked with celebrities.
But, the court documents say, Chase ignored its underwriter’s red flag and prequalified the Aleksandrovs.