Lenny Dykstra Suing Chase Over Bad Mortgages

March 18, 2010 No Comments »

bad news bears

Former Philadelphia Phillie (and Met) Lenny Dykstra, also known simply as “Nails,” has sued JPMorgan Chase for $100 million over mortgages he obtained during the housing boom.

Dykstra claims he was “fraudulently induced into borrowing more money than he could afford,” leading to his eventual bankruptcy.

The lawsuit involves $20.5 million in mortgage loans, $12 million of which came from former lending giant WaMu, now owned by Chase, and another $8.5 million in the form of a second mortgage.

The loans were used to purchase former hockey great Wayne Gretzky’s six-bedroom, eight-bath mansion in Thousand Oaks, California for $17.4 million in 2007 and pay off loans tied to another home in Simi Valley, CA.

Per the lawsuit, he was “steered” to a different lender for the second mortgage, though it’s standard practice to get a piggyback second from mortgage lenders that specialize in such loan programs.

The second mortgage was due in full after just one year, and was expected to be refinanced, though WaMu apparently reneged on the deal, likely because of the impending real estate crash.

The monster super-duper jumbo loans left Dykstra with a massive $135,000-a-month mortgage payment, which eclipsed the $125,000 he made in monthly income.

Talk about a debt-to-income ratio fail.

Sounds like he used stated income to get the deal done, considering he was an “entrepreneur” with all types of stuff going on.

Dykstra says he was eventually forced into a number of unfavorable transactions to make good on the $8.5 million mortgage, causing him to take on even more debt.

He was also involved in more than 20 lawsuits related to his entrepreneurial activities, which led to his bankruptcy filing last July.

The Thousand Oaks estate is being listed by Ewing & Associates for a hefty $14.9 million.

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