Bankruptcy filing stalls foreclosure on rundown home

Neighbors of a rundown home saw hope in a judge's order, but now they have a new problem.

By Susan Taylor Martin, Times Senior Correspondent
In print: Tuesday, March 4, 2008

Though the circumstances are unusual, experts say it's the kind of scenario that could be repeated as foreclosures become increasingly common. [Susan Taylor Martin | Times]
	[Susan Taylor Martin | Times]

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ADVERTISEMENT Victor Clavizzao helped a man on Social Security obtain a loan for $650,000 for the home.

For months, the house on 18th Street NE had been the talk of St. Petersburg's upscale Harbor Isle neighborhood.

Bought in early 2007 for a suspiciously high amount, the house sat vacant and increasingly rundown. So neighbors were pleased when a Pinellas judge issued a final judgment of foreclosure Jan. 29 and ordered the house sold at public auction on March 12.

"It certainly hasn't helped to have a deserted house next door," says Jim Weber, who hoped it would soon be in the hands of new owners who would live there and take care of it.

Those hopes are dashed for now.

Last week, the current owner filed for protection from creditors under Chapter 13 of the bankruptcy laws, a move that automatically cancels the auction and puts the foreclosure on hold. In addition, one of the owner's business partners — a convicted thief and fraudster — has leased out the house and may be able to collect rent payments for months while the bankruptcy case proceeds.

Though the circumstances are unusual, experts say this kind of scenario could become more common as foreclosure cases continue to rise.

"It sounds like what they're doing is stalling so they can collect rent," says Don Golden, a bankruptcy lawyer in Tampa.

The lakefront house has raised eyebrows in Harbor Isle ever since it sold in February 2007 for $650,000 — $250,000 more than it had sold for just a few months earlier even though the Florida real estate market already was in the doldrums.

The most recent buyer was James Conard, who had been paralyzed in a motorcycle accident and was living in an apartment for the low-income disabled. Nonetheless, Conard obtained 100 percent financing.

At the time, Conard was working with Victor Clavizzao, a loan officer who had served years in prison for wire fraud and grand theft. The St. Petersburg Times has chronicled Clavizzao's dealings, which include buying millions of dollars worth of Pinellas County real estate in the names of other people — including some who had no idea they were listed as buyers.

In a story last spring, Conard said Clavizzao encouraged him to buy the house as an investment. Conard said he got enough cash from the loan to cover the first few payments and invest $20,000 in a sandwich shop Clavizzao had bought. But Conard was unable to rent the house for anything near the $3,500 a month Clavizzao told him he could get. The place remained vacant and went into foreclosure proceedings in August.

Nearby residents watched with dismay as the lawn turned weedy and the pool pea-soup green. Then a young man and woman showed up last week, telling neighbors they were leasing with an option to buy "from a guy named Victor," according to Patti Barlow, who lives next door. The man, who had rented from Clavizzao before, said Clavizzao offered to give him a deal if he fixed up the house. "I said, "Be careful because you may be throwing your money away,' " Barlow recalls.

The couple moved in over the weekend, prompting neighbors to call police twice to report "suspicious persons." On Saturday, Clavizzao arrived and told an officer that he and James Conard owned the house and were renting it to the couple.

Police took Clavizzao at his word and "chalked it up as a neighborhood dispute" requiring no further action, said St. Petersburg police spokesman Bill Profitt.

But neighbors accuse Clavizzao of once again gaming the system, aided by Conard's bankruptcy filing. "Victor has been doing this for years,'' says Sally Bauscher, a real estate agent who lives nearby. "He should be in jail."

Clavizzao, on probation from a recent grand theft conviction, could not be reached for comment. Nor could Conard, who in his Feb. 28 bankruptcy filing listed a $637-a-month income from Social Security and debts totalling $1.1-million, including the $650,000 loan on the Harbor Isle house.

Debtors in bankruptcy proceedings can keep their property, but only if they make the payments. Unless Conard makes regular mortgage payments, the lender could ask the court to lift the stay so foreclosure proceedings could resume.

Mortgage companies can also file a complaint with the court if fraud is suspected. "I've been waiting for that to happen more," says Golden, the bankruptcy lawyer. "A lot of these 'stated-income' loans weren't legitimate and weren't always upfront and honest about what the income really was."

However, Golden notes, it can be months from the time a stay is lifted until a house is sold. In the meantime, the owners or rental tenants can continue their occupancy even if they don't pay a cent or do anything to keep up the property — a prospect that worries neighbors who see their own property values declining.

"It's not helping anything," Weber says of the ratty-looking lawn next door. "Thank goodness I'm not selling now."

Susan Taylor Martin can be contacted at susan@sptimes.com.