Wall Street on a Beechview street: Foreclosed house in disrepair remains in limbo

Deteriorating property's owner -- Res Distressed Asset Fund XXI LLC, 44 Wall St., NYC -- fails to respond to legal action

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Since a Wall Street firm moved to Beechview last year, local officials have found it difficult to ring the new neighbor's bell.

That's because it has proved impossible to pin a fine on an obscure investment fund that has purchased 1506 Dagmar Ave. and then allowed the modest house to become overgrown and structurally suspect. Conditions identified in May by Pittsburgh building inspectors -- notably a gaping hole in the wall under the front porch -- remain six months later, and efforts by both the city and Allegheny County to force a fix or levy a fine have failed.

"Someone -- whoever owns it, or whoever is taking care of it -- should take care of it," said John DeMeo, who lives next door to the house. "Because at times, that front yard, and that backyard, looks like a jungle. ... The side of the wall is collapsing, I know that."

The 80-year-old, three-bedroom brick house, until recently a locally owned rental, has become a piece of flotsam carried by the tides of the national real estate crisis -- and one apparently untouchable by local guardians of neighborhood quality of life.

A Beechview-based landlord bought it in 2004 for $70,000, paying nearly double what the county said it was worth. He mortgaged it to the hilt, then didn't make the payments, resulting in a 2008 foreclosure filing that said he owed more than he had paid for the house.

It was taken in foreclosure by Deutsche Bank National Trust for $3,245 and six months later sold for $5,600 to an obscure entity called Res Distressed Asset Fund XXI LLC.

County property records show that Res Distressed is located at 44 Wall St. in New York City. There is almost no public record available on the fund. It appears to be one of innumerable private funds created since the foreclosure crisis began through which investors seek to make money on troubled property.

The funds' theory, according to investing trade journals, is that now is the time to scoop up properties, cheap and in bulk, that might be worth more when the real estate market rebounds. In the meantime, there may be tax benefits to the holders of such property.

Res Distressed isn't the only obscure entity taking title to foreclosed buildings in neighborhoods around the area. "I'll get calls, like, 'Who is this entity? Who is that entity?' " said Phyllis DiDiano, president of Community Leaders United for Beechview.

As the Dagmar house deteriorated, residents took their concerns to the city Bureau of Building Inspection and the county Health Department.

A year ago, the city sent Res Distressed notice of the house's broken porch wall and front steps, overgrown weeds, deteriorated shingles, falling soffit and bowed front porch. It gave the fund 30 days to fix the problems.

After nothing happened, the bureau used deeds to identify a New York City man, Dov M. Shimanowitz, who appeared to be the agent of Res Distressed. The bureau filed a housing code complaint.

"I took a ride out and looked at this property, and none of this work was done," District Judge Jim Motznik said. He said no one showed up to represent Res Distressed or Mr. Shimanowitz at a May 24 hearing at his Brookline office.

"From time to time, we do see this happen," Judge Motznik said. "A name comes up where it's out of town and strange-looking as to who the real owner is."

He slapped Mr. Shimanowitz and Res Distressed with a $6,000 fine, the maximum allowed for the violations.

Mr. Shimanowitz emerged after the fine was levied. He hired a local attorney -- Andrew Szefi of Goehring, Rutter & Boehm -- who appealed the fine. Mr. Szefi claimed in the appeal that Mr. Shimanowitz "does not own property and did not receive notices" from the city.

"He was an authorized signer, but not an employee" of Res Distressed, Mr. Szefi said. "He's no longer associated with them at all.

"That judgment should not have been entered personally against him, because he is not the owner of the property."

On Nov. 1, Senior Judge Robert C. Gallo of Allegheny County Common Pleas Court accepted that argument and found Mr. Shimanowitz not guilty, nullifying the fines. Judge Gallo could not be reached for comment.

The Health Department in June found the same problems with the wall and plant growth.

"It's a jungle in the summer months," Mr. DeMeo said. "It grows maybe 8, 10, 12 feet before it gets cut." He said he has seen unidentified animals rustling through the brush and has noted rats, as have other neighbors.

When Res Distressed did nothing, the Health Department slapped a $2,500 fine on the property. That was ignored, so the department filed a judgment, meaning the amount will have to be paid before the property is sold. There is nothing else the department can do, said its spokesman, Guillermo Cole.

Res Distressed also has not paid city, school and county property taxes.

Residents complained, inspectors went out and a court levied the maximum fine, Judge Motznik noted, showing that the system worked. In the end, though, nobody paid, and the problem remains.

"Along with me being frustrated, the neighbors on that street get frustrated because nothing gets done," Judge Motznik said.

"This is disconcerting about Judge Gallo's ruling here," Ms. DiDiano said. She said the situation leaves her feeling "powerless. ... We definitely, definitely feel underserved, and our hands are tied."

Rich Lord: rlord@post-gazette.com or 412-263-1542.


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