Donald Trump squeezes Bank of America

The company is trying to sell a huge estate it foreclosed on. But the business magnate's cagey moves present a problem.

By Kim Peterson Jul 1, 2011 2:49PM
Credit: (© Richard Drew/AP)

Caption: Donald TrumpThis is one foreclosure that won't go Bank of America's (BAC) way.

Donald Trump is putting a huge squeeze on the bank as it tries to foreclose on a 24,000-square-foot estate in Virginia. Bank of America owns the house and is trying to sell it for $16 million, The Wall Street Journal reports.

Maybe the bank could sell a normal estate for that much, but not in this case. You see, Trump owns the backyard, the front yard and most of the driveway. He doesn't own the house itself, but he's willing to take it off the bank's hands for, oh, $3.6 million.

Ah, you gotta love the Donald. Here's how this nightmare for Bank of America came about:

It all starts off with Patricia Kluge, a socialite who divorced her uber-wealthy husband in 1990 and got $100 million in the settlement. But that wasn't nearly enough for Kluge, who blew through the money and declared personal bankruptcy in June.

She owned the estate, along with its winery, spa, home theater, 3,500-bottle wine cellar and 2,000-square-foot sitting room, the Journal reports. But her financial world began unraveling, and in 2009 she tried to sell the place for $100 million. That eventually got dropped to $24 million. Still no takers.

But something funny happened in that divorce settlement. Kluge's ex didn't want her to sell the house from under the rest of the family, so he split off the front yard and driveway to benefit his son, the Journal reports.

And that was just the break Trump needed. The family trust created for the son ended up selling 200 acres to Trump for less than $500,000 -- a deal that also included the backyard and most of the driveway.

By the way, check out this BusinessWeek discussion about Donald Trump and why he's such a force in American business.

Post continues below:
So that left Bank of America in a tight spot. Its mortgage on the estate was $22.8 million, the Journal reports. And so it took the house to auction, but no one wanted a house with no driveway and yard.

Trump bid $3.6 million for the house at a foreclosure auction before Bank of America changed its mind and bought it back for $15.3 million. That isn't uncommon for a bank to do, the Journal reports.

And now everyone is waiting to see what will happen next. The bank thinks it can still sell the place. "We believe the house is a salable asset as it is," the house's broker told the Journal.

But Trump could hardly contain his glee. "Maybe someone is stupid enough to buy the house," he said. "I wish them luck."

17Comments
Jul 1, 2011 6:13PM
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Where there is money there are crooks nearby.
Jul 4, 2011 12:27AM
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You only hear of Donald's "good deals"....You never hear about his bad deals and all the people that got stiffed on his many bankruptcies and the folks that bought the Bonds to finance his many failed projects that only got pennies on their dollar back while he played the system in court.....Why don't someone ask him why he never threw on a uniform and served his country???...This guy is a phony and a bum.
Jul 4, 2011 12:34AM
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Without borrowed money on daddies good name.....(which he tarnished).....he would be nothing....period.....
Jul 1, 2011 4:47PM
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BoA got beat by "The Donald" Yeh !!! 
Jul 2, 2011 3:50PM
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Donald and Madoff have a lot in common
Jul 2, 2011 5:37AM
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I am so glad that Donald is putting it to BOA . They are taking our home because of the paper work we sent in for the home redention plan . They said they didn't recieve in time . We sent it in with one of there packages . I called one month later and they said " its being reviewed" , two more months go by (i had been calling on a regular basis once a week )and they called to ask me what am i going to do about paying off the mortage ? They said its been over 11 months now so i can't do the redention plan . 3 months they sat on our paper work to screw us out of our home and right now you could get maybe $20,000 for it and that is only because of the land . What comes around goes around . BOA can take our home and stick it where the sun don't shine . Someday you will get your turn .

Donald is only a small part of what BOA deserves .

Jul 1, 2011 7:33PM
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Trump showing his true colors. No wonder he did not want his financials being reviewed by the press during his "bid" for the oval office. Money is his only motivation!
Jul 4, 2011 7:02AM
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If I had enough money, I'd buy the mansion and build a helicopter pad on the roof. 'No one wants a house with no yard and no driveway".  Yeah? Well no one wants a yard and a driveway with no HOUSE. I'd have to have a LOT of money before I'd do it, but I'd still do it just to "Thump the Trump". Keep the lovely yard; I simply don't need it. I don't even need the HOUSE...not as much as you do, anyway...you a.h.
Jul 5, 2011 2:38AM
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BofA never messed with me in any way. No late fees, no missed payment fees, no fees or penalties of any kind. I don't understand why people are so hard on them...oh, maybe it's because we always paid our bills, and always on time...you know, lived within our means. The Donald, however, is another story. In a few more years, he'll lose this asset too, and maybe BofA can buy it at the time of his next bankruptcy. The low-life losers that live in the houses that BofA LOANED them the money for quite upset me. BofA was legally entitled to take back these houses through proper channels when the low-life losers refused to hold up their end of the deals, and it really upsets me when the low-life trash the place on top while they live for free for a couple years on top of it all. When are you going to realize that the banks, no matter how big they are, do not make money sticking to you, so they generally do not. It is quite popular for many of the politicians and lawyers to demonize the banks, but I think it's now run it's course. For the most part, they only want you to hold up your end of the deal you signed with them.
Jul 3, 2011 12:35AM
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"So BofA should lease the house to a Charity for 20 years for a nominal sum"

How is a charity or anyone suppose to get into the house if you can't drive or walk up the driveway or over the lawns?  You gonna sell it to a charity that can parachute into the kitchen every day?  Could get crowded because they can't leave that way very easy.
Jul 2, 2011 1:38PM
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It's so nice to see that the banking system can not get there way as easy as they have in the past. Thumbs up for Donald. Watch him buy from the bank for 3 million and than sell it for 70 million.
Jul 2, 2011 2:40AM
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Not that I'd side with Donald in any issue but the sweet thing about this is that while Donald may play his hand to ulitmately suit himself as always....He played his hand in such a way as to completety snooker "Greed of America". This is pretty much a given that the bank will lose in this and as for anything bad happening to any commercial bank these days thats a good thing. Bank of America has run over anything and anybody recently to get what they want so I salute the Donald in this case and hope he takes a stake to Bank 'O' Cra$%# and sticks it to them. Watch wait and see...they will sell it to him then say they lost alot of money on the deal a request a tax funded bailout!
Jul 3, 2011 8:46AM
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Kluge's story is typical of the exorbitant excess & exposes the problems with media & the entire misinformation conspiracy that has tried to shield the true causes & irresponsibility of the people actually at fault for creating the current, as well as past, socio-economic catastrophes. Their leverage & debts are truly outrageous but more upsetting is the ideology has been taken by government & bureaucrats to indulge them without being answerable to the citizens & to their civic duties. Such hypocrisy & propaganda isn’t new in ScAmerica, but shouldn’t be condoned or allowed to proliferate as it has.

Whoever said that government should be run like a business needs to drink a cup of shut up because that has invited irresponsibility, unaccountability, opacity, autonomy, & many other problems portraying catastrophe. The golden parachute mentality has indulged thievery, cronyism, promoted moral hazards, ethical breaches, reduced performance, & ensured overindulgence without any so-called return on investment; beside those issues, the essential constraint is that expenditures never should exceed revenue. Since citizens don't seem to give a damn, all the privatization has reduced accountability & created infrastructure issues without providing any reduction in expenditures let alone a return on investment so to speak since rule of law is abused for, among other things, allowing some to evade their just contributions to the public revenue in the form of taxes & such. However, it seems in all their brightness that the idea of selling off public property & activities or providing advertising on public space to corporateers is a way to generate revenue. Not only is this an absurd situation that either exposes a lack of intelligence, disregard, or complicity as is outright branding the government as corporate cronies; consider the moral hazard that the condition creates where they won't dare impose any constraints or penalties when a crime is committed since it would interrupt their revenue stream. We must stop the selling out of our public interests & end the heisting of our social institutions such as medicine & education as well as our utilities & natural resources especially water. Too many entitlements & support have gone to the wrong people & organizations only because rule of law has been abused by corruption & cronyism.

Jul 5, 2011 1:18PM
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Why not buy a house that someone else owns and must take care of the front yard, back yard, and driveway? Maybe I will buy it so Trump can mow HIS lawn that sits in front and behind my house. Who wants to take care of a lawn anyways? I will just sit on the porch with a glass of wine and watch Trump mow his lawn. That will be the best wine ever.
Jul 3, 2011 8:48AM
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Why should citizens be imposed either directly or through their government with supporting businesses operating costs, training their employees, or let alone propping them up when they are irresponsible, incompetent, & commit crimes? That is what has happened & continues as kleptocrats compromise protections or eliminate oversight let alone prosecution, legislators indulge those deemed tbtf, the so-called justice system doesn't impose penalties that suit the crime or provide appropriate levels of compensation for the damages, Federal Reserve siphons off the Treasury or transfers the debt burdens into the government debt or directly onto other citizens, medicine has forsaken human values so that profit is made from suffering without any accountable standards for treatment let alone providing remedies, & education administrations are commandeered by corporateering tools preying upon citizens so that they graduate as indentured servants. I would mention utilities like electricity & water but you get the idea where soundness & even economic principles aren't being applied but overindulgence & unaccountability is the mode of operation during this unethical era rife with troubling mores & lacking the appropriate value set even at the local levels of government & business where government kleptocrats, civic employees, & others are ruining their communities & selling out their citizens by eliminating civic services & allowing infrastructure to deteriorate. Not only was TARP a scam but also the stimulus was a tragic failure when all those supposedly shovel ready projects espoused where really just administrators shoveling stink. There is a low level of regard for the public good because they lack any concern for upholding the public trust. When such egregious hypocrisy, fraud, & malfeasance occur then justice should be strong & swift.

Beside that, there are the problems of incompetence & accountability of many businesses disregarding fiduciary responsibility let alone being realistic about growth potential when they are indulged with easy money by virtually having direct access to our Treasury, transferring their debt burdens onto other citizens, & an undeserved entitlement of support despite the disparity & instability that it has caused. Then they unduly influence easily corruptible legislators & instill bureaucratic cronies to evade taxes or other such public revenue obligations & reduce protections.

It's unjust, as it should be upsetting to citizens that such disparity exists in ScAmerica. Trump isn't the only one that has taken advantage of this situation but his intentions are suspect as well; although he has a penchant for exploiting the conditions & showing how foolish it has become.

Jul 3, 2011 12:32AM
Jul 2, 2011 3:28PM
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if bank of america sells it to that deadbeat i hope they get cash

anytime that loser borrows money from anyone he never pays them back.

 

i woud not lon that sicko 5 cents because he does not have enougnh intelligence to know how to run a profitable business that is why he has filed bankruptcy so many times. of course he is mentally disabled with a very lo IQ, so we should not make fun of him, but we dont have to loan the loser any money either

 

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