D.C.’s notorious slumlord, Carter Nowell of Sanford Capital, is now facing bank foreclosure at two of his properties and is delinquent in mortgage payments on three others. The company, which has received millions of dollars a year in taxpayer subsidies by way of housing vouchers for low-income tenants, was the subject of recent investigations in both City Paper and The Washington Post.

But financial data on these five properties, which together represent roughly a third of Sanford’s D.C. holdings, show a company in strong financial health through mid-2016, the period for which data is available.

While Sanford’s coffers were well padded, those living at its properties suffered conditions as desperate as repeated raw sewage leaks and persistent vermin infestations.

One such property, Elsinore Courtyards, is on the outer edge of Southeast D.C., blocks from the Maryland border and nearly a mile from the nearest Metro station. In financial statements provided to City Paper by Trepp Wire (a data provider to real estate and finance industries), Elsinore’s revenue numbers are attractive. Wells Fargo reviewed the statements and confirmed that, though it is not the original lender, it is the master loan servicer for all five properties.

The statements show that Elsinore Courtyards, like the other four properties, generates enough cash to meet its mortgage payments, suggesting that Sanford is able to pay but has chosen not to. Elsinore’s debt-service coverage ratio, a financial term that describes how much cash is available to pay current debt, is 1.23. (Any number over 1 indicates enough income to meet current debt obligations.)

The numbers also suggest the possibility that additional parties—whether individual investors, other funds, or Nowell himself—have also put money into these properties. Elsinore’s loan-to-value ratio is about 70 percent, meaning that other funding sources may cover the remaining 30 percent of the deal.

Meanwhile, one building at Elsinore is in such disrepair that, for several years now, it has intermittently leaked human waste into its parking lot, flowing down into a neighbor’s back yard. Residents say the entire building smells like raw sewage inside. And when city inspectors examined Elsinore last March, they found an astounding 243 code violations across 152 apartments. One unit alone had 28 violations.

At Oak Hill Apartments, also in decrepit physical condition, the financials are even healthier. Oak Hill’s 2016 occupancy rate was 94 percent, and its debt-service coverage ratio a comfortable 1.44. As of the third quarter of 2016, its net cash flow totaled nearly $700,000 for that year (though in the Trepp statements, that figure doesn’t account for debt payments).

Also striking is Sanford’s borrowing history for each of the five properties in question (Elsinore, Oak Hill, Sayles Place Apartments, Wayne Place Apartments, and Fitch Apartments, which are all in Wards 7 and 8), which follows a similar pattern over several years.

This pattern is well illustrated by the case of Sayles Place Apartments, which is currently in foreclosure.

Nowell and his original business partner Patrick Strauss, along with Patrick’s wife Mary Strauss, signed a $3.8 million loan, through their business entities, to buy Sayles Place in 2010. Four years later, Nowell more than doubled his loan amount to $7.25 million through a refinance with Basis Real Estate Capital II, part of the New York-based Basis Investment Group (an LLC in bad standing with the state of Maryland, which has since sold off all five of these loans), and the Strausses did not sign on subsequent mortgages. In documents provided by Trepp Wire, Sayles Place is appraised at $9.5 million. The District’s tax assessment for the property is about half that amount, or $5 million.

This is the pattern across all five properties. First Nowell and the Strausses sign for a loan. Later, the bank uses an appraisal value several millions higher than the purchase price. Nowell refinances with Basis, vastly increasing the loan amount (in some cases it’s not the first refinance). He makes regular payments on properties that are, at least on paper, in great financial health. Then in February of 2017 he stops making payments, with a brief return to current status in March at Sayles Place only.

At Elsinore, Nowell is currently on the hook for a loan of $12.2 million, even though Sanford bought the property for a mere $2.3 million via a foreclosure sale in 2012. The mortgage-holder prior to the 2012 foreclosure was the District of Columbia Housing Finance Agency. In Trepp’s statements, Elsinore’s appraised value was $17.6 million as of 2014, the year Sanford increased its loan to $12.2 million.  

Nowell, who has refused media inquiries for the past several months, responded to City Paper’s request for comment on its foreclosures and delinquencies with an email statement.

“Sanford Capitol [sic] owns several properties that are being driven into bankruptcy by the Attorney General, District agencies, and tenant advocates,” wrote Nowell, making reference to lawsuits against the company filed by AG Karl Racine. “Each of these properties currently houses numerous tenants who haven’t paid rent in months or even years in some cases, severely limiting our ability to maintain and make improvements to these buildings. We are a business and do not have the unlimited resources of the District government.”

Racine sued Sanford Capital for conditions at its Congress Heights property in January of 2016 and its Terrace Manor property in October of 2016. Sanford subsequently filed for bankruptcy at Terrace Manor. All three cases are pending, and neither property is listed as delinquent in the Trepp reports.  

Nowell writes that “Sanford took prompt action to sell its portfolio” after relationships with the city and tenants declined. Sanford’s properties are on the market, though the company still owns most of its original D.C. portfolio. 

The company has also proven itself adept at filing evictions. In the case of Terrace Manor, Sanford filed 33 eviction cases at the 61-unit property in 2013, the first year it owned the complex.

For residents, the implications of foreclosure are vague. Though Wells Fargo is the master servicer on all of these loans, each is currently in the hands of a “special servicer,” who is charged with trying to work out a solution to nonpayment.

Living conditions that degrade daily life is the dominating issue for most of the 30-and-counting Sanford tenants City Paper has spoken with over the past seven months. Foreclosure is a long and complicated process that may or may not result in a new property owner or spur tenant relocations.

In one special case among the five delinquent properties, Wayne Place Apartments, the combination of financial failure and terrible conditions has meant just that. The 57 units at Wayne Place were subject to a federal subsidy program through the Department of Housing and Urban Development, and the D.C. Housing Authority “initiated termination of the Moderate Rehabilitation (MOD) contract as a result of the owner’s non-compliance at that property,” says Rick White, communications director for the D.C. Housing Authority. Through HUD, the housing authority gave each Wayne Place tenant a housing voucher and also offered assistance in finding a new apartment.

But an apartment search for a voucher-holder is no easy matter in D.C., nor in many rapidly gentrifying cities in America. Displacement from a unit can mean displacement from the city entirely.

“Whenever we lose an entire building of affordable housing, that has consequences for all affordable housing in D.C.,” says Beth Harrison, supervising attorney in Legal Aid D.C.’s housing unit. “At Wayne Place, those tenants all get vouchers, but that building was a hard physical building of affordable housing. That matters, because for tenants to use their vouchers, we need to have affordable housing units in the District, and they are scarce.”

“When you have, as in the case of Sanford, such neglected maintenance, you have tenants already under a lot of pressure to leave,” she says. “And whenever there is a change in ownership there is often also pressure for tenants to leave because a new owner may have new plans for the building, often plans that involve charging higher rents.

This article has been updated.

Andrew Giambrone contributed reporting.