After years of renting, Amos and Lucinda Wiggins yearned for a home of their own. But with bad credit and no money to put down, hope was running out.
In Robert L. Norman, they thought they found their starter home angel.
Bad credit? No matter. Norman found them a mortgage lender, even fronted $250 for their homeowners' insurance. No money to put down? Norman had plenty of houses to sell.
"I thought it was some type of miracle," Amos Wiggins recalled.
Indeed, in just four years, Norman has pulled off some remarkable real estate deals.
He was an ex-con on parole from a New York log cabin scam when he launched a buying spree in St. Petersburg's poorest neighborhoods. His businesses bought more than 220 single-family homes, once owning more homes than anyone else in the city.
Along the way, Norman cashed in on the naivete of inexperienced buyers, selling homes for two or three times what he paid. Several buyers said he even provided phony down payments to deceive lenders.
Norman also coaxed millions from private investors, often borrowing twice what he paid for a house. Investors thought they were underwriting a thriving renovation business. In fact, they were stoking a borrowing machine. At the end of two years, Norman had borrowed about $3-million more on houses than he had paid for them.
Now, his high-flying venture is collapsing.
Banks are foreclosing and investors are scrambling to take over the remains of his housing stock. More than 100 properties have been foreclosed upon or returned to investors.
About half the people who dreamed of owning their own homes also have defaulted on their mortgages. Many inexperienced buyers such as Amos and Lucinda Wiggins have discovered their homes need costly repairs. They can't bail out by selling because they paid too much in the first place.
"If he really believes in God," said Amos Wiggins, "he should be on his knees right now because he has messed a whole lot of people up."
The scope and nature of Norman's deals beg the question: Why didn't they attract attention outside the affected neighborhoods? In fact, the Pinellas County appraiser so questioned his sales that most were rejected from the formula used to set property values. Ultimately, the combination of inexperienced buyers and private investors allowed the deals to continue largely unnoticed.
Norman, 63, declined to discuss his business. In a letter, his attorney described Norman's dealings as "acceptable business practices." The lawyer also said Norman has incurable bone marrow cancer.
Meanwhile, St. Petersburg's poorest neighborhoods, targeted for renewal after civil unrest in 1996, have taken another hit. Such high-markup, easy-credit operations devastate buyers, discourage lenders and often leave neighborhoods with boarded-up homes and foot-high weeds.
"You have low-income individuals who don't have the means to buy homes, and you are promising them the world," said Tom de Yampert, the city's manager for housing rehabilitation. "That's a virus in our neighborhoods that somehow we have to stop."
From block to block, the area is a picture of contrast.
One family might nurture their home for three or four generations, while a succession of renters might trash the house next door. Boxy, masonry homes out of the 1950s line some streets. On older streets, tiny wood-frames suffer from faulty wiring, leaky roofs and termites.
Income levels in the area bounded by Fourth and 49th streets south and Central to 30th Avenue traditionally have fallen among the city's lowest, a problem underscored in late 1996 by two nights of disturbances.
City officials promised to inject money and programs to improve life in the neighborhoods. And, in fact, a strong national economy recently has created jobs and energized the home sale market.
Into this milieu came Robert Lee Norman.
A native of Illinois, Norman had run afoul of the law in Virginia, New York and Florida's Panhandle. He bounced checks, reneged on a construction deal and sold log cabin kits that never materialized.
"It would appear that (Norman) has concentrated for most of his adult life on taking advantage of others for financial gain," a New York parole officer wrote in 1993.
New York authorities gave Norman a chance to turn his life around in June 1993 when he was paroled from Adirondack Correctional Facility. A condition of his release from prison: "Not to engage in the business of buying/selling real estate or housing."
He moved to Manatee County, where Florida probation officers agreed to keep an eye on him through February of 1998.
For two years, Norman did refrain from real estate sales. He told probation officers he was working low-wage jobs for General Electric, the Florida Department of Transportation and a Tampa contractor.
Then, about four years ago, he crossed the Sunshine Skyway bridge. Little yellow yard sides sprouted in St. Petersburg: "For sale. No down payment."
To hear Norman tell it, he had good intentions.
He recently told City Council members during a hearing: "My goal when I came to St. Petersburg was to put 1,000 people into homes to help fight the drug situation."
Norman named his business We Eight Inc. because seven family members helped him rehabilitate houses. He also operated under the name of We Eight Trust and Christy Housing Inc.
A We Eight house usually received white paint with Kelly green trim. Inside, thin carpet covered floors for as little as $3-a-yard. Kitchens got linoleum and, often, a small stove and refrigerator. Sometimes cabinets and counters were refurbished, or central heat and air conditioning installed.
Most importantly, many buyers said, you could buy a We Eight house with little or no money.
"I heard they had a program for people with bad credit and low income," recalled Tonya Jones, a 33-year-old nurse's assistant raising three children. "I didn't have to pay any down payment, no closing cost, no money out of my pocket at all. I could just move right in there."
The tradeoff was price.
Jones paid $40,000 for a 72-year-old Childs Park home eight months after We Eight Trust had bought it for $14,000. The financing worked like this:
With Norman's help, Jones got a $32,000 mortgage loan from Eagle Fund Group. She agreed to pay We Eight the balance over time. On paper, the loan looked secure to Eagle Fund because it was shelling out only 80 percent of the sale price. The $32,000 meant Norman would collect twice what he paid for the house _ even if Jones never paid off the balance.
Several buyers described another financing arrangement that allowed We Eight to retain more of the sale price. All it took was a surreptitious down payment.
Norman "told me he was Christian. That he wants to help needy people," said Ozie Okoh, a 45-year-old woman who provides day care in her home. "He told me, "You've got five kids. You don't have any money. You work for $5 an hour.'
"It was a blessing from heaven for me. I mean I jumped for joy. Giving me money!"
Norman's generosity allowed Okoh to pay $53,000 for a four-bedroom home on 11th Avenue S that We Eight had bought a year earlier for $18,000.
The deal was arranged through the federal government's FHA program for low-income buyers. The FHA requires a down payment of at least 3 percent, which the buyer or buyer's relatives can provide.
But the FHA forbids the seller from making the down payment because loans tend to go sour when the buyer has no financial stake in the deal.
Okoh's mother, Mary Wilson, recalled how We Eight routed the down payment through her credit union on the day of closing. Velma Brooks Lane, a We Eight employee who worked with buyers, gave Wilson about $2,000 to put into her credit union account, Wilson said. Wilson withdrew the money and gave it to her daughter for the down payment.
Lane declined to comment.
Robin Powell, attracted to her house by a "zero down payment" sign, said she complained to Norman when FHA closing documents showed her making a down payment and paying closing costs.
"He said, "Well actually, you're not paying it, but we have to show the bank you are,'
" Powell said.
"Velma from We Eight, myself and my sister met at my sister's bank one morning. Velma handed my sister $3,000-something dollars. My sister gave it to the bank teller. They, in turn, handed my sister a certified check for three-thousand whatever it was.
"And then, my sister had to hand it to me, because it had to be a family member, showing that the money came from us for a down payment."
In 1997, Port Richey residents Charles and Anna Durso were looking for a high-yield investment. Charles, 74, is a retired auto mechanic with muscular dystrophy. "My son ... saw it in the paper where you could get all this money in interest," Anna Durso, 71, said.
An "Investor Prospectus" said We Eight was "the largest rehab investment company in Florida and quite possibly the U.S." The company wanted "to provide quality, affordable housing to low-income and first-time home buyers, while engendering a Christian atmosphere."
We Eight would pay 18 percent interest, the prospectus promised.
Indeed, early Norman investors said he paid faithfully.
One of the Dursos' sons lent $29,900, which he recouped in two months, with interest. Encouraged, his parents and siblings joined in, investing about $200,000 as a family.
But while the Dursos and others continued to invest, Norman's sales lagged far behind his buying and borrowing.
By the end of the second year, Norman's companies had purchased about 170 houses while selling about 40. Investors, impressed by the possibilities, had lent him about $5.8-million on houses he had purchased for about $2.7-million.
That meant Norman could use proceeds on new loans to pay interest on old ones _ even without selling many houses.
Fort Myers resident Hugh Barbour, who publishes Christian books, said he felt he was making a difference as well as making money. Norman showed him a few finished houses, including one that a little girl was moving into. Her eyes lit up when she told Barbour she was going to have a house with a yard and a dog.
Barbour said he typically would lend $30,000 to $33,000 on a house that had cost Norman about $20,000 to $25,000. The way Barbour saw it, the house would be renovated and resold for $45,000 to $50,000, so he was risking less than its eventual market value.
Barbour eventually lent Norman's companies nearly $2-million and gave him copies of The Bible Promise Book to hand out to home buyers.
Norman's prospectus promised buyers that their investments would be backed by mortgages worth 150 percent of their investment. In fact, he often used the same house as collateral for more than one investor at a time.
In June of 1996, We Eight paid $15,000 for a 1,100-square-foot house in the Perkins neighborhood, near 18th Avenue and 24th Street S. Norman's companies then borrowed at least $25,000 on the house from three different investors, records show. At one point, the house simultaneously was pledged as security for more than $75,000 in loans.
None of the investors _ Barbour, Dr. Robert Kratz or Charles and Anna Durso _ knew about one another, they said, although Norman eventually repaid all three of those loans.
Toward the end of 1997, Norman began selling houses to himself, frequently raising the price and securing bigger loans along the way.
Over three or four months, We Eight and Christy sold more than 40 houses to Norman, who took title as an individual. These houses originally cost the companies about $800,000. After reselling them to himself, he used the houses as collateral to borrow about $1.5-million from 11 banks and mortgage brokers.
Then, within a few months, he stopped paying on most of his outstanding loans.
The fallout isn't pretty.
Members of the Durso family haven't received payments for about a year on three mortgages worth $95,000. They've hired real estate lawyer John Parvin to put pressure on Norman. If they have to repossess and resell the properties, Parvin said, they'll be lucky to recover 50 cents on the dollar.
"It's a hardship," said Anna Durso. "We're not rich people."
Barbour, the Christian publisher, has taken back about 30 houses and figures he has lost half his nearly $2-million investment.
"Half of these houses will have to be demolished," Barbour said. "I'm in something of a state of shock."
In one instance, Christy Housing, one of Norman's companies, bought a house on 21st Avenue S for $10,000. Barbour lent $50,000 on this house, thinking that it would be rehabilitated. A few months after the loan, the house was in such bad shape that the city started demolition proceedings.
"Obviously, I was too trusting of these people," Barbour said, "and now I'm paying the price."
No Way Out
Robin Powell can make her house move. She rises from her living room couch, walks across the floor and says, "Now watch here."
When she flexes up and down on her knees, furniture in the room starts to rock.
Powell says the house is so out-of-level and the support beams so rotten that one night, as she and her husband lay quietly in bed, the armoire and TV tumbled onto the bed.
The roof leaks, the heater stopped working and the toilet sometimes backs up into the kitchen sink, said Powell, a 41-year-old customer service representative for an insurance business.
In 1997, Powell paid $47,000 for a 753-square-foot house near the railroad tracks that We Eight bought a year earlier for $29,900. She figures she can't sell because she owes more than anyone would pay.
Arneitha Wilson, a 40-year-old nursing home housekeeper, paid $40,000 for her two bedroom home a year after We Eight bought it for $11,000.
Within months, she said, pipes in the kitchen started leaking, the kitchen cabinets pulled away from the wall, the window air-conditioner failed and the toilet started rocking back and forth.
"There's no way this house is worth $40,000," said Wilson, a single mother of four. "They just put carpeting on the floor, they put tile on top of old tile."
Unhappiness with Norman is not universal. A half-dozen buyers said they were reasonably content with their We Eight homes.
Henry Fisher Jr., a warehouse manager, paid $37,000 almost two years ago for a We Eight house in Childs Park, then spent another $5,000 putting in a driveway, fixing the plumbing, replacing windows and a back door.
He's not thrilled that We Eight paid only $18,000 for the house. But he's grateful that Norman helped him find a mortgage. "It was like a blessing," said Fisher. "That's why I jumped on it."
Eighteen people who bought high-markup homes from Norman, however, already have defaulted on their loans.
For Amos and Lucinda Wiggins, disillusionment arrived with their first tax notice. They had paid $40,000 for the house, two months after We Eight bought it for $16,000. The Pinellas County property appraiser placed the market value at $16,000. Neighbors confirmed that $40,000 was way above the going rate for similar houses.
When the roof started to leak and drug dealers began passing packets in the front yard, the couple moved out and stopped paying.
"I got bamboozled," said Amos Wiggins. "I got bamboozled bad."
What's a Norman house worth after foreclosure? Not much, judging by a few resales and appraisals.
We Eight Trust paid $15,500 for a house on Queen Street S and sold it four months later for $35,000. After the buyer defaulted on her FHA loan, the U.S. Department of Housing and Urban Development had to repay the lender almost $38,000 for principal and costs.
Last summer, HUD appraised the house at $15,000.
Bessie Witchard learned quickly about the stigma of foreclosure.
Soon after she abandoned a We Eight house, she received a $3,000 tax rebate and tried to put it down on a car. No dice. Her credit report revealed the foreclosure and no one would lend her money.
Witchard, a 25-year-old housekeeper, takes the bus. She and four children live in a two-bedroom rental. "They aren't going to give me another chance," she said.
While high-markup sales can ruin personal credit, the community often loses more: the nurses, restaurant workers, boat builders and others who could have invested themselves in a piece of the neighborhood.
"From their standpoint, this is another way of saying the system doesn't work, the system takes advantage of me," said Pinellas Property Appraiser Jim Smith. "They work hard to get ahead, they take two steps up the ladder and all of a sudden they are on the ground."
De Yampert, the city housing manager, was more emphatic: "Those people are the backbone of the neighborhood.
City programs will help low-income people clean up credit and buy solid houses, he said. But the zero-down yard signs often reach them first.
"Someone comes to them and says, "I have a house I can get you into. Don't worry about your credit,' and they think everything is fine."
That promise has been pitched before.
Twenty years ago, Dward Gaskins Jr. bought and quickly resold _ often at double or triple the price _ about 50 homes in predominantly black neighborhoods south of Central Avenue. Buyers told the St. Petersburg Times that Gaskins coached them into falsifying loan applications and left them with dilapidated houses. The allegations prompted an FBI investigation. Gaskins eventually pleaded guilty to federal counterfeiting charges in an unrelated case.
In the mid-1980s, more than 400 poor people in Tampa and St. Petersburg bought high-markup homes from Residential Investment Corp. Buyers said the company coached them into inflating incomes on loan applications. Within years, almost half of Residential's buyers defaulted on their loans.
A few years later, St. Petersburg businessman Terence J. McCarthy fed at the same trough. Most of his high-markup sales ended in foreclosure. He eventually pleaded guilty to charges that he falsified down payments and other information on FHA loan applications.
As a result, some public officials watch for the hallmarks of questionable housing deals. Smith's appraisers reject unexplainably high markups from the computer model that sets property values. Most of Norman's sales were rejected.
City housing officials cited Norman numerous times for unpermitted work and code violations.
But no one protects people from their own inexperience and gullibility.
"As long as we have folks with damaged credit not financing with mainline banks and someone offers them a quick fix and they are willing to bite," said De Yampert. "This is going to go on forever."
Computer-assisted reporting specialist Constance Humburg, and news researcher Kitty Bennett contributed to this report
Ozie Okoh eyes the buckling paint on the house she bought from one of Robert Norman's companies. She paid $53,000 for a house Norman bought a year earlier for $18,000.
Bessie Witchard holds Irene, one of her four children. She had bought a house from one of Robert Norman's companies for $44,000, three months after he bought it for $26,000. She lost the house to foreclosure within a year and now is living in a two-bedroom apartment. At left, she tries to get her four children dressed and off to school on a Monday morning.
The stucco on Theresia Leggett's house is crumbling off her house at 1825 Auburn St. S. She paid $57,000 for the house, which one of Norman's companies had bought for $14,500 a month earlier.
Robin Powell stands in the window of the house she bought from one of Norman's companies. Powell, who lives at 1145 Queen St. N., says her sewer has backed up into her tub and sink and her roof leaks.
Bernard Leggett holds up bugs in a jar that he and his wife Theresia call "water bugs." They say the bugs are attracted by the leaking shower in the house they bought from one of Robert Norman's companies. They have stopped using their shower because of the damage caused by leaks.
THE ROBERT L. NORMAN STORY OF BUYING AND SELLING HOMES
By the numbers
+ Houses purchased by Robert L. Norman and his companies, We Eight, We Eight Trust and Christy Housing:
More than 220. + Average purchase price:
+ Average sale price:
+ Foreclosures against Norman's companies or properties retrieved by investors:
More than 100
+ Buyers of Norman properties who later defaulted on their loans:
1125 16th Ave. S.
+ 4-10-96 Norman buys house for $15,000
+ 6-10-96 Norman sells house to Willie Mae Speights for $43,000
2564 11th Ave. S.
+ 10-14-96 Norman buys house for $18,000
+ 10-27-97 Norman sells house to Ozie Okoh for $53,000
3521 17th Ave. S.
+ 9-26-96 Norman buys house for $15,800
+ 8-1-97 Norman sells house to James Dixon Jr. for $49,000
1825 Auburn St. S.
+ 7-10-96 Norman buys house for $14,500
+ 8-12-96 Norman sells house to Theresia Leggett for $57,000