One of the most prominent critics of the mortgage banking industry enjoyed significant profits in the 1990s by flipping residential properties, including foreclosed houses purchased at steep discounts.
According to new research conducted by the Boston Herald, former Obama administration advisor Elizabeth Warren was an active house flipper in Oklahoma City's residential real estate market between 1993 and 1997. A review of land records found Warren and her family purchasing homes and flipping them for resale at substantially higher prices.
Warren first became involved in house flipping in June 1993, when she bought a foreclosed home from the U.S. Department of Housing and Urban Development for $61,000. She sold it in December 1994 for $95,000. In August 1993, she bought a home for $30,000 and flipped it five months later for $145,000 – a 383% profit on her initial investment.
The Boston Herald also found Warren provided her family members with financing for their own house flipping endeavors. This included financing her brother's 1994 purchase of a $25,000 house – he sold it in 1998 for $42,000 – and providing her sister-in-law with a mortgage in 1996 to purchase a $31,000 home that was sold three years later for $45,000. Warren's interfamily lending included interest, thus giving her a profit on her lending.
Warren, who is currently the Democratic candidate in Massachusetts for the U.S. Senate, has spoken and written at great length on the role played by the financial services industry in the run-up to the housing bubble's meltdown. However, a statement issued by her Senate campaign sought to downplay the news of her previously unreported ventures into real estate finance.
‘Elizabeth and [her husband] Bruce are fortunate to be in a position where they can help their family,’ said the Warren campaign in the press statement. ‘They have been able to help relatives buy their homes and her nephew – a contractor – fix up houses.’