Gorgas Extract $500,000 in Equity in a Cash-out Refinance of Their Overpriced Home for Sale

Comments posted in a New York Post article published online in May 2011 about the Gorga’s not paying their bills:

“Hey Joe, you are the biggest a$$, pay us the money you owe us for installing your elevator!” – Stephen Ferrara, Asst. Sales Manager at Standard Elevator, July 18, 2011

“nice house I helped you build Pay me the money you owe me bigshot.” – Scott Roberts, student at University of South Carolina, June 27, 2011

On February 2, 2007, Joe Gorga purchased the lot at 8 Pond View Ct., Montville, NJ for $950,000 cash (which was profit from the 2006 sale of the first home Joe built — 149 Pulis Avenue, Franklin Lakes, NJ), and the deed was in his name only.

When he took out a construction loan on November 16, 2007, to build the mansion on the lot, he transferred the deed into both his and Melissa’s names (the interest rate on the loan was 9% and the loan was obtained by putting two properties up as collateral — 11 Mermaid Rd, Toms River and 489 Summer St. Paterson, NJ). This construction loan agreement on November 16, 2007 was for $2.25 million.

They modified the mortgage loan agreement beginning on July 1, 2009 (the mortgage note modification agreement lists their address as 35 Gravel Hill Road, Kinnelon NJ), converting the loan to a three year term period with 6.25% rate and monthly payment of $14, 842.56 until July 1, 2012, when the entire amount of this loan would have become due and payable (balloon payment).

They modified their mortgage for the second time on March 24, 2011 (principal now $2,185,199 with a 5% interest rate and a monthly payment of $11,829 until April 1, 2041) — the modification was necessary since the first modification would have expired on July 1, 2012, and the balloon payment would have been due had they not modified the loan.

On October 11, 2012, the Gorgas refinanced their mortgage for $500,000 more than they owed to extract equity from their home, most likely to pay down debt or make additional purchases — in other words, they received $500,000 cash back (less closing costs) at the close of the new loan by borrowing $2.68 million (the new loan amount) versus $2.18 million (the principal balance on the old loan).

On the cash-out refinance, the initial rate of 4.125% will change to an adjustable rate on November 1, 2019, and the adjustable rate may change on that day every 12th month thereafter. Before each change date, the new rate will be calculated by adding 4% to the current index. The rate at the first change will not be greater than 9.125% or less than 4%. Thereafter, adjustable interest rate will never be increased or decreased on any single change date by more than 2% from the rate of interest being paid for the proceeding 12 months. Interest rate will never be greater than 10.125%.

The amount they borrowed in their cash-out refinance on October 11, 2012, would have been limited to 90% of the home’s value, which means that if the Gorga’s borrowed the maximum amount allowed, their home is valued at approximately $3 million, yet they have it on the market for $3.8 million, which is why is hasn’t sold — it’s overpriced.

“Why don’t you pay your bills… you have to borrow money every week from people.” – Joe Gorga to Joe Gorga during part 3 of the season 4 reunion special

Are the Gorga’s broke, borrowing money from people every week just to pay their bills, like Joe Giudice said at the season 4 reunion? Someone asked Kim D on Twitter, “Do Joe and Melissa live close to Tre? Why are they selling their house?, to which Kim replied: “They’re broke.” Here are more tweets from Kim D about the Gorga’s finances:

“Joe and Melissa, you r broke. Don’t get it twisted. ahhh Joe Gorga wanted to shut me up as soon as I came out. He knows I know too much to mess with me. All the feuds stem from business. QUESTION OF THE NIGHT: what # is bigger, the # of cupcakes you’ve made, eaten, or the # of $$ Melissa Gorga owes to the Gov’t? Melissa Gorga ‘s PSE&G was turned off 4 3 days. Idiot. Melissa Gorga you’re poor, you’re a sleaze, your world goes around, so long as you’re on your knees. For the last time!!! Teresa Giudice had NO clue about what I was doing. PERIOD!” – Tweets from Kim D (‏@KimDPosche), during the premiere of part 3 of the reunion special

“Honey. U r as broke as they come. It seems like u have as much trouble shutting ur mouth as u do ur legs. Not in ur skillset. @melissagorga” – Kim D (@KimDPosche), September 29, 2012, Twitter

“Melissa Gorga’s checks bounce more than she does. Scary. That’s why she needs a store as in debt as she is to afford the stripper costumes.” – Kim D (@KimDPosche), September 29, 2012, Twitter

“Melissa Gorga, you’re poor, you’re a sleaze, your world goes around, so long as you’re on your knees.’ – Kim D (@KimDPosche), October 14, 2012, Twitter

Joe tweeted some photos (see below) of a home he has under construction and the ‘haunted house’ that he is converting into condos. Could the house he is building be Melissa’s new dream ‘spec’ home? Joe and Melissa told Us Weekly on May 22, 2012 and Reality Aired on May 12, 2012:

“I’m a builder. I custom-built the houses we have lived in and will do the same with our next one,” Joe tells Us Weekly exclusively. “We tried Montville, but it just wasn’t for us. We want to go back to Franklin Lakes, which is closer to where I work, and we’re looking at a couple of properties now.”

“Wait till you see the next house I build,” he tells Us.

“I absolutely love our current house and will be sad to leave, but Joe is an incredible builder, so I have no doubt that I’ll love the next house just as much. Although this is the last time he is getting me to pack-up!”, said Melissa.

“We gave Montville a try and want to move back to Franklin Lakes before the kids reach an age where they will all be in school. When we sell our house in Montville, we will move into a rental while Joe custom builds our next house. Joe is a builder and a businessman. He will sell pretty much any property for the right price and build again bigger and better.”

Joe Gorga’s purchases of investment properties since 2008 have been under the company name ’10 Courtland Street LLC.’ They are as follows (in season 4 episode 2, Joe pointed out the various buildings he owns on a city block, saying he put each under his children’s names — but that doesn’t appear to be the case):

May 16, 2008
Construction Loan Mortgage
$3.5 million

Granted to 10 Courtland Street LLC; Guiseppe Gorga

To undertake the development, construction, equipping and furnishing of construction of the renovation of a former storage building into a 58-unit residential building.

Property Address(es):
10-18 Courtland Street, Paterson, NJ
132-136 Barclay Street, Paterson, NJ

Instrument Type MORTGAGE
Instrument# 2008033271
Date Recorded 06/04/2008
Book/Page M9888/33
Mortgagor 10 COURTLAND STREET LLC; GORGA GUISEPPE
Mortgagee BCB COMMUNITY BANK
Block/Lot N/A/
Township PATERSON CITY

July 1, 2009
Commercial Mortgage
$6 million

Granted to 10 Courtland Street LLC; Guiseppe Gorga

Property Address(es):
10-28 Courtland Street, Paterson, NJ
17-25 Camden Street, Paterson, NJ
27-33 Leslie Street, Paterson, NJ

Instrument Type MORTGAGE
Instrument# 2009038533
Date Recorded 07/20/2009
Book/Page M10511/209
Mortgagor 10 COURTLAND STREET LLC; GORGA GIUSEPPE
Mortgagee BOILING SPRINGS SAVINGS BANK
Block/Lot N/A/
Township PATERSON CITY

March 18, 2010
Mortgage
$3.71 million

Granted to 10 Courtland Street LLC; Guiseppe Gorga

Property Address(es):
10-28 Courtland Street, Paterson, NJ
17-25 Camden Street, Paterson, NJ
27-33 Leslie Street, Paterson, NJ
132-136 Barclay Street, Paterson, NJ

Instrument Type MORTGAGE
Instrument# 2010016202
Date Recorded 04/12/2010
Book/Page M10906/223
Mortgagor 10 COURTLAND STREET LLC; GORGA GIUSEPPE
Mortgagee BOILING SPRINGS SAVINGS BANK
Block/Lot N/A/
Township PATERSON CITY

Related:

• Is Joe Gorga Broke and Facing Bankruptcy?; Does He Really Pay His Bills?; Why Are the Gorgas Selling Their Homes?; Joe Gorga Has a Negative Net Worth of $1.5 Million
• Melissa Gorga’s ‘I Just Wanna’ Music Video; Melissa May Have Sold Out Her Husband’s Family for Less Than $20,000 from iTunes Sales of Her Songs
• Melissa Gorga Was Arrested for ‘Retail Theft’ in Florida in 1997
• 2009 Tax Sale of Gorga’s Property on a Municipal Lien for Non Payment of Water/Sewer Fees