Elderly Harlem Homeowner Giselle Allard’s Mortgage Balloons From $100,000 To $7 Million
What began as a $100,000 mortgage 20 years ago on a dirt-cheap piece of property along a crime-ridden neighborhood has escalated to the most ludicrous of debt at more than $7 million.
Now Giselle Allard is being forced to sell at least some of her properties to pay off the astronomical debt. Allard told the Daily News:
At issue is a brownstone Allard bought in 1998 for $135,000 at 50 E. 126 Street.
The Harlem homeowner put $35,000 down and reached an agreement directly with the owner, Robert Robinson, to pay the rest, $100,000, over the next 10 years.
However, Robinson died a few months later. Robinson’s death left Allard confused about where to make the payments. Allard said she tried to make several payments to Robinson’s lawyer. But the checks went uncashed. She soon stopped sending them altogether.
Allard’s lawyer Robert Strougo also states Robinson requested she stop making payments. Strougo said Robinson feared the hospital where he was being treated would seize the money to pay down his hefty medical bills. This further complicated the problem.
The claim that Robinson asked Allard to stop making payments is not mentioned in the various court papers.
The Interest Rate The Harlem Homeowner Was Paying Jumped From 6% To 25%
Nearly a decade passed before anyone tried to collect from Allard. When debt collectors came knocking the bill was a doozy. Debt collectors told Allard she was being charged 25% as a penalty for allegedly defaulting on the loan instead of the 6% signed on the agreement.
In 2009, a court-appointed referee tallied Allard’s bill to nearly $400,000.
Lawyers for the executor of Robinson’s estate, a relative named Jocelyn Davis, argued that the debt should be 25% interest compounded monthly for the 10-year life of the loan and every month since. Manhattan Supreme Court Judge Judith McMahon accepted the insane calculations offered by Davis’ legal team last September.
The court ordered Allard’s building on E. 126th Street auctioned off on August 21 for $1.2 million to pay down her debt. However, the sale has not yet been finalized.
The Harlem homeowner also owns two other properties that could soon face similar fates. Two are set to go on the auction block on September 12th.
Allowing such high interests rates is rare, according to lawyers with expertise in mortgages.
Real Estate Lawyers Say the Problem Facing the Harlem Homeowner Are Rare
The Harlem homeowner wasn’t based on the principal amount of the loan like most mortgages. The interest was being charged on the principal plus the interest that was accumulating every month.
Based on that the debt reached $5 million as of early last year. Manhattan Superior Court Judge McMahon signed off on that amount.
Estimates since then have the debt more than $7 million, including taxes and penalties.
Dead Man’s Estate Says Harlem Homeowner Took Advantage Of The Unsophisticated Late Mr. Robinson
Court records also paint a picture of a woman who hired a drug addict to work as a handyman at E. 126th Street and has failed to file tax returns since 2012. not hire an accountant after promising she would.
Mikolay and Davis also claim that Allard has never made any effort to pay the debt or settle the dispute.
Strougo disputed this. He claims in his latest filing that Allard recently discovered a ledger documenting payments to Robinson and his lawyer when Robinson was still alive. He also said that banks would not have proof of transactions from the time because they don’t maintain records that old.
A later bankruptcy proceeding determined that Allard — who is listed as having a net worth of $11.4 million, consisting primarily of the value of her real estate — would have to sell off at least some of her property to raise the money to pay off the debt.
Friends and neighbors describe Allard as a stubborn woman who lacks attention to detail but means well.
But according to court testimony, she gave in February, three of her buildings are vacant, one since as far back as 1999.
Friends Of The Harlem Homeowner Say She’s Being Robbed
Lovett and other financial advisers said Allard should have paid into an escrow account after Robinson died. This way she could have the money on hand when someone came to collect.
She didn’t. Still, they said the price she is paying now for her negligence is way too high.