Elizabeth Warren, crusader against greedy banks, turned a profit ‘flipping’ homes

posted at 1:16 pm on June 3, 2012 by Howard Portnoy

Commonalities between Democratic Senate candidate Elizabeth Warren and her former boss, President Obama, continue to emerge. Both believe in big government—perhaps justifiably since both are beneficiaries of affirmative action. Both claim to be part Cherokee, an allegation neither can substantiate. Both have been vociferous critics of predatory lending and of the foreclosure crisis that has made home ownership more of an American nightmare than a dream.

Now it turns out that both also have a history of shady real estate dealings. Obama’s admitted “mistake” in buying a strip of land adjoining his property from a man under investigation for influence peddling is well-documented. Now, thanks to the Boston Herald, Warren’s real estate transactions are also public record.

The article notes that Warren “took part in about a dozen Oklahoma real estate deals that netted her and her family hefty profits through maneuvers such as ‘flipping’ properties, records show.”

Let it be said at the outset: There is nothing illegal about buying foreclosed properties at bargain-basement prices and then selling them for a tidy profit. But the optics are dreadful and raise ethical questions for a candidate whose campaign website laments:

We are in the midst of one of the greatest economic crises in our country’s history—a crisis that began one lousy mortgage at a time. But in spite of the almost quarter of a million families here in the Commonwealth who are underwater in their mortgages and the over 40,000 families who have lost their homes through foreclosures, we still haven’t seen swift and serious action to get the housing market working again.

The next paragraph goes on in pretty much the same vein, though if there were a thought bubble containing the subtext, it might read, “No sense meanwhile in letting a gold mine go to waste.”

The Herald lists a half-dozen deals in which Warren bought low and sold high, realizing profits as high as 383% of her investment costs. In one telling example, she bought a foreclosed home from the U.S. Department of Housing and Urban Development for $61,000. She sold the property 18 months later for $95,000, a 56% mark-up.

Some of the deals involved Warren’s relatives, and in some cases the time of retention of the title deed is measurable in years. Nevertheless in each case, the homes were ultimately unloaded for double-digit, if not triple-digit, gains.

The Herald quotes a statement from the Warren campaign to the effect that Warren and her husband “are fortunate to be in a position where they can help their family. They have been able to help relatives buy their homes and her nephew—a contractor—fix up houses.” But for a Senate candidate resolved to fight for the middle class, it still reeks of hypocrisy.