This post was originally published as part of “The Trump Files”—a collection of telling episodes, strange but true stories, and curious scenes from the life of our current president—on October 5, 2016.
In early 2006, eager to cash in on the housing bubble he believed would continue to grow indefinitely, Donald Trump unveiled his newest business venture, Trump Mortgage LLC, at a reception in Trump Tower. “Trump Mortgage is going to take better care of people than anyone in the mortgage industry ever has,” he promised.
In some ways, Trump Mortgage was typical of a lot of Trump’s ventures, in that Trump licensed his name to an idea that someone else had come up with. In this case, the CEO, EJ Ridings, had suggested a mortgage company to Trump’s son, Donald Trump Jr., and Trump had given it the green light. But unlike some licensing deals, Trump also played a key role in getting it off the ground. He hired Ridings as the CEO of the company he was lending his name to, met with him to plot strategy before the big launch, blitzed the financial press to talk up the company, and was listed as a “key executive” on the company’s website. He even provided Trump Mortgage with prime office space at his building at 40 Wall Street in Manhattan, from which employees cold-called borrowers with subprime mortgages seeking to refinance their loans.
Despite Trump’s prediction about the strength of the market—he repeatedly told Trump University students in 2006 that there was no housing bubble—the bubble burst in 2007. By February 2007, Trump Mortgage stopped paying rent to its landlord, 40 Wall Street LLC—which Trump owned, through the Trump Organization. What happened next? One Trump company took the other to court. In July 2007, 40 Wall Street LLC petitioned New York County Civil Court for $57,367.95 (the unpaid rent plus $450 in legal fees) and asked for permission to evict Trump Mortgage from its 25th-floor space. After Trump’s Trump Mortgage LLC failed to respond to the petition, Judge Debra Samuels ruled in favor of the Trump-owned 40 Wall Street LLC, and the struggling mortgage company, which went out of business in 2007, was booted out of Trump’s own building.
Trump wasn’t the only person stiffed by Trump Mortgage. In 2008, the New York Supreme Court ruled that the company owed one of its former mortgage brokers $298,274 in compensation for a deal she’d negotiated. The broker told the Washington Post in February that she still has never received a cent.
After the firm’s collapse, Trump preferred to act as if the whole mortgage adventure was never more than a passing fad. “The mortgage business is not a business I particularly liked or wanted to be part of in a very big way,” he told Crain’s New York at the time. And his once-rosy predictions about the housing market had done a 180 too. “People have been talking about the end of the cycle for 12 years, and I’m excited if it is,” he said of the housing bubble. “I’ve always made more money in bad markets than in good markets.”