Justice's stepdaughter involved in property shuffle currently seeking her own short sale

DETROIT (WXYZ) - Not long after she unloaded her home on Lake St. Clair through a short sale, Supreme Court Justice Diane Hathaway and her husband moved to a 2,400 square foot home on Grosse Pointe Park's Balfour Street.

But the good news, according to property records: they didn't have to pay for it. Property records show it was given to Hathaway from the previous owner, who just happens to be her stepdaughter, Sarah Kingsley.  She bought it a few months earlier, but she didn't need a mortgage to do it.  She paid almost $200,000 in cash.

With that in mind, It may raise eyebrows to learn now that that same stepdaughter is trying to have her own short sale. That’s when a homeowner convinces his or her bank to let them sell their home for less than they owe on it.  Not everyone gets one, though, and you have to qualify based on a hardship, like a loss in income.

When Kingsley paid cash for the Balfour home, she still had a big mortgage on a Grosse Pointe Woods home, for more than $166,000.  If she’s saying she can’t afford that mortgage now, where did she get the cash to buy the Balfour home? 

It’s part of a shuffle Hathaway wouldn’t explain back in May when we aired our initial investigation, and still won’t talk about today.  But it raises more doubt about whether the money used to buy the Balfour home really belonged to Hathaway’s stepdaughter in the first place.

Now, we know it’s a question the feds will soon be asking.  As we were first to report last week, the FBI launched its own investigation in response to ours.  Grand jury subpoenas have already gone out.  And whether they like it or not, this federal probe may soon become a family affair.

As of last month, Hathaway’s stepdaughter’s home received an offer on the short sale, but she needs to wait for her bank to approve it.  7 Action News left a message for Kingsley at her home, but has not heard back.

Justice Hathaway's lawyer Steve Fishman declined comment. 

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