ABC12 Investigates: Symphony Homes

MID-MICHIGAN (WJRT) -- (11/16/09)--Some homebuyers are calling it one of the worst mistakes of their lives. A deal that promised the house of their dreams turned sour.

Several Mid-Michigan families are now struggling to recover.

We first told you about Symphony Homes two years ago. Back then, business was good.

Our follow-up report tonight paints a different picture.

The pitch sounded great: Trade in your old home, trade up to a new one. "To tell you the truth, I think it's a great deal," said Carol Eberhardt from Symphony Homes during a 2007 interview.

But for Tony Grubish, it was no deal at all. "It's probably one of the biggest regrets I have in my life."

He and his family first heard about Symphony Homes in early 2008, just a few months after ABC12 ran a series of reports on the company's Trade In, Trade Up program. Symphony would agree to buy your old house, if you'd agree to buy one of their new ones.

"No strings attached," Grubish recalled.

Grubish says he and his then-pregnant wife filled out the paperwork and were about to move into a new Symphony home in Genesee Township.

But one week before closing, the deal ran into a snag. "At the last second, they said, 'Oh, I have bad news. We can't finance you for two FHA loans," Grubish said.

So instead, he says, Symphony convinced him to sign a land contract for that new home. "My first instinct was to get up and walk out. But again, I had a pregnant wife who was pretty torn and distraught about it. We were pretty much led up, up until that point, to believe this was going to happen."

He learned Symphony wouldn't lease or buy his old house, either. Eventually, the old home slid into foreclosure, and Grubish couldn't afford the new one.

Now, he says he's out roughly $25,000 and 180 points off his credit score. "I probably won't be able to get financed for at least 10 years, probably," he said. "We're throwing the thought around of even just filing for bankruptcy."
Jodi Evans and her husband, Jeff, are past that point. "It's embarrassing. We were backed into a corner," she told ABC12's Gabe Gutierrez.

They filed for bankruptcy after financing fell through for their new home. "Emotionally draining. As for as the kids, because here they are excited, about to move into a new home, and then all of a sudden, they can't," Jeff Evans said.

The Evans are suing Symphony Homes, asking for their $10,000 deposit plus other related expenses, interest and attorney fees. In court documents, Symphony denied any wrongdoing, calling some of the allegations "hogwash."

Our ABC12 investigation turned up more complaints, from customers to contractors.

"There's been a tremendous amount of unjust enrichment to their properties, yet we can't get anything back," said landscaping contractor Joe Kudwa.

Kudwa and his landscaping company helped build many of Symphony's subdivisions -- in Burton, Davison, Grand Blanc and Goodrich. He says he trusted the company until he stopped getting paid in 2007.

"Unfortunately, it's the creditors that take the hit. And it's a lot of families that they're affecting," Kudwa said.

And then there are the McMahans. "The view in our backyard was absolutely gorgeous," said Kelly McMahan.

They were a Symphony Homes success story, or so they thought. They bought a beautiful new home in a great Davison neighborhood. Just before Christmas last year they learned that a lien had been placed on their property. They were told Symphony hadn't paid its builders, so they were on the hook for more than $20,000.

"We're good people. We work hard. We try to do what we can. And it really bothered us that we were being sued for something that we couldn't do anything about," McMahan said.

They ended up settling out of court, but not before they spent thousands on attorney fees.

It's not what they expected when they traded up.

"I think it started as a good concept, but they tried to grow too fast for what they could afford," said Rick McMahan.

So what happened to Symphony Homes? The company's headquarters on State Road in Davison is empty. That hasn't changed for months. But what has changed is the growing list of debt collection notices on the front door.
As it turns out, the company filed for Chapter 11 bankruptcy protection in August 2008.

It had been run by two men: realtor Steve Burges and builder Don Mahoney.

Neither would talk to us, but their attorney, Jeff Chimovitz, did. "Like all human beings, I think Symphony's principles were optimistic. That optimism brought them a long way during good times. It probably kept them from making the hard decisions in a bad time."

Chimovitz says when the housing market collapsed, the banks stopped financing mortgages, leaving no more easy money for customers. "In a strong sense, they ought to feel betrayed."

But, Chimovitz says, those customers should not blame his clients. In a way, he claims, his clients were victims, too. "From their point of view, if they could've gotten the banks to go along and cooperate, they could have come a lot farther to taking care of their tenants."

That explanation doesn't sit well with some of those tenants. They argue they were misled and ignored after being promised the home of their dreams.

"It was pretty crushing. We didn't have any idea what we were going to do," Grubish admitted.

Grubish says he's trying to bounce back. His family's now in a land contract with a private investor in Lapeer County, and he's decided not to sue Symphony Homes.

After all, the company does not face criminal charges and no longer has any assets. He does hope stories like his serve as a lesson for home buyers and even home builders. "I think they were greedy."

"I don't think they got greedy as much as stubborn," Chimovitz said.

For Grubish, what seemed like a great pitch came at a high price.

"If it's too good to be true, it's too good to be true," Grubish said.

Trade-In, Trade Up programs aren't unique to Symphony Homes. Some real estate agents say they can work, but there are steps you should take to make sure you don't get a raw deal.

First, hire an experienced attorney at the start of the process. Many of the families we spoke to for this story say they didn't.

Also, make sure you get all financing offers in writing.

If you think the deal falling through might slide you into bankruptcy, maybe it's not the best time to trade up.

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