State Senate candidate Lydia Edwards allegedly used improper mortgage to purchase Chelsea home for profit; used mortgage money for East Boston home upgrades

  An Advocate Newspaper investigation has found that Boston City Councilor Lydia Edwards, a candidate for State Senate, utilized an improper, federal residential mortgage to purchase investment property in Chelsea, Massachusetts, in 2015. In the lead up to Edwards’s investment acquisition and over the course of her ownership of the multi-unit property, at least five tenants were evicted, the property’s rents increased by nearly 40%, and Edwards as landlord faced multiple municipal citations for blight and poor waste disposal on the property.

  The Advocate’s investigation, based on registry records, court records, Chelsea rent data, and campaign finance reports, reveals that Edwards’s tenure as a landlord did not always align with her public stances on housing and tenant matters. From mid-2016 to January of 2018, Edwards served as the First Deputy Director of Boston’s Office of Housing Stability. She left the position to serve as the District 1 City Councilor on the Boston City Council, representing East Boston, Charlestown, and the North End. On the Council, she has advocated for tenant rights and more affordable rents. She has similarly made housing the centerpiece of her campaign for State Senate.

  Despite her public positioning, disclosures filed with the Office of Campaign and Political Finance suggests that Edwards’ contributions from major Boston developers are far more extensive than she has publicly acknowledged. Among her significant contributors are Thomas O’Brien and others from HYM, which controls the large Suffolk Downs development in Revere and East Boston.  Edward P. Champy, III, a contractor with Waypoint Development, LLC, and Jacob Citrin, the Miami-based CEO of Cargo Ventures. Citrin and Turnbull develop commercial and industrial facilities that often compete with affordable housing providers over finite land in East Boston, Chelsea, and surrounding cities.

Use of Improper Federal Mortgage

Records on file at the Suffolk County Registry of Deeds show that, on August 15, 2015, Edwards purchased a three-family dwelling at 63 Marlborough Street in Chelsea for $549,900. In connection with that purchase, Edwards, as the sole borrower, applied for and received a federally insured mortgage, known as an FHA 203(k) Rehabilitation Loan, in the amount of $555,364. According to HUD, an FHA 203(k) loan is only available to purchasers of 1 to 4 family homes who may use a portion of the loan to make immediate repairs.  The program, which does not require high credit scores, also provides better interest rates to borrowers than conventional business loans that are normally used for investment properties. However, loans under the 203(k) program are not available to those looking to purchase property solely for investment purposes because of strict FHA guidelines requiring owner occupancy.

According to the HUD guidelines, “FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.” Such a requirement was included in the FHA 203(k) loan that Edwards signed in 2015. HUD makes clear that “under no circumstances may investors use the exceptions to circumvent FHA’s ban on loans to private investors and acquire rental properties through purportedly purchasing ‘principal residences.’”

At the time of the Chelsea investment purchase, however, Edwards, who is also an attorney, lived at 186 London Street in East Boston, another multifamily property she purchased in 2008 also through an FHA 203(k) loan. Her voter enrollment certificate, filed with her state nomination papers for the May 2016 special election to replace then resigning Senator Anthony Petruccelli, listed her address as 186 London Street in East Boston. The date of Edwards’s filing was less than one year from the date of her purchase of the Chelsea property, meaning that Edwards was not complying with the requirement of her FHA 203(k) loan that she principally live at the Chelsea property for at least one year. According to voting records, Edwards has voted from the East Boston address in every election since 2008. There is no evidence that Edwards has ever registered to vote in Chelsea after purchasing real estate there.

Additional evidence establishes that Edwards never lived at the Chelsea property. Edwards never declared the Chelsea property a homestead nor did she apply for an owner-occupied tax exemption from the City of Chelsea, whereas she attained both for her East Boston property. Homesteads and residential real estate tax exemptions are common for properties that are principally owner occupied.

Evictions, Rent Hikes, Fines & Profit

In addition to the allegedly improper mortgage, Edwards’s acquisition and ownership of the Chelsea investment property immediately followed the eviction of at least five tenants. Soon after, proposed rent hikes of nearly 40% and multiple municipal citations for blight and poor waste disposal on the property.

When the Chelsea property was publicly listed for sale on April 28^th, 2015, prior to Edwards’s purchase, the MLS Listing sheet stated that there were existing tenants living in Units 1 and 2. Over the next two months, five tenants were evicted from the property.  Just sixteen days after the final eviction, Edwards placed the property under agreement.

After acquiring the Chelsea property, Edwards used loan funds to upgrade the units. Following the renovations, the property’s units were advertised at a rental price of $2,300 per unit compared to the $1,700 per unit that the evicted tenants had previously been paying.  The property however had sanitation issues.  Chelsea municipal records show that Edwards was cited by the City’s Inspectional Services Department on at least three separate occasions between January 18^th, 2016 and April 6^th, 2017.  Court documents dated just before the sale of the Chelsea property reveal that Edwards was suspected of diverting rental income from the Chelsea property for use on her East Boston home.

Despite the sanitation issues, sales records show that Edwards sold the property in 2019 for $825,000 or $275,100.00 more than what she paid for it.

However, Edwards maintained that there was no wrongdoing on her part.

“I lawfully purchased the home, paid the taxes and sold it years ago. My intent was to start a family with my new husband and we needed space,” she said. “Ultimately, I accepted a position with Mayor Marty Walsh as the head of the Office of Housing Stability, public service for which included a Boston residency requirement. Years ago, I sold the house as part of a painful divorce.”