A home in Missouri City, Texas, that is an investment property of Mitt Romney, who financed the home to its current occupants in 1997. Credit Michael Stravato for The New York Times

Look closely and it is there, sandwiched between Goldman Sachs Hedge Fund Partners II and D3 Family Bulldog Fund: the mortgage on Timothy and Betty Stamps’s modest home on Gentle Bend Drive here.

Nearly lost among the blizzard of hedge funds, thoroughbred horses and other gold-plated investments in Mitt Romney’s personal financial disclosures, the interest from the $50,500 mortgage is loose change to Mr. Romney, whose net worth has been estimated at close to a quarter-billion dollars.

Yet for the Stampses, who have been writing $600 monthly checks to “Willard M. Romney” for 15 years, the money they borrowed from him to buy their home in 1997 was life-changing.

The mortgage is the last vestige of a troubled, and previously unreported, investment by Mr. Romney in Texas real estate in 1982, before he struck it rich as the wunderkind of Bain Capital. And while the Stampses’ happy ending is a counterpoint to the image, seized upon by political opponents, of Mr. Romney as a cold, calculating financier, the episode also offers an early illustration of his appetite for deals promising low risk and high return.


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Andrea Saul, a Romney campaign spokeswoman, declined to answer questions about the Texas investment.

At the time Mr. Romney made the investment, he was a rising star at Bain & Company, the management consulting firm, and was still a couple of years away from starting Bain Capital, its private-equity spinoff. Real estate speculation was rampant in Texas, and William Roy Jolly, an airline pilot and investor from Utah who knew Mr. Romney through the Mormon Church, approached him about investing in a deal to buy new low-to-middle-income houses at a discount.

The deal, Mr. Jolly said, was “a marvelous scheme” to help renters who could not qualify for a mortgage to eventually buy their houses, while allowing investors to write off depreciation and mortgage interest on their taxes without risking their own money: most purchases were 100-percent financed with first and second mortgages from Texas banks.

The prospectus for the investment, called the Gem Plan, played up the tax shelter benefits, saying it was structured “so that deductions are projected to be twice the amount of the cash required each year.”

Mr. Romney elected to buy five houses, intending that the profits would accrue to each of his five sons, Mr. Jolly said.

“Mitt loves clever ideas that are designed to make everyone involved richer, and he loved this idea,” he said. “He could take a bit of tax depreciation up front, give the houses to his sons, and eventually the renters, after a five-, six-, seven-year period, could buy a home on their own. Everybody wins.”

As luck would have it, there were few winners.

Mr. Romney borrowed more than $300,000 to buy the properties, according to property records. Rental income covered expenses for a time, but with the market downturn in the 1980s, the deal quickly soured.

Property records show that liens for unpaid community association fees were filed against two of Mr. Romney’s houses and that the mortgages on them were soon underwater. By the end of the decade, the homebuilder who sold the houses to Mr. Romney went bankrupt, and some other investors’ houses were in foreclosure.

“The bottom just fell out of the market,” said Kenneth Cornett, a Houston financial planner who was Mr. Jolly’s partner in the deal. “People lost a lot of money during that time.”

It is not clear if the renters made out any better. The Gem Plan was structured so that they paid monthly “option-to-purchase fees” and, if they elected to buy, the purchase price would reflect a 12 percent annual increase in the value of the house over the rental period.

As Mr. Romney’s fortunes rocketed at Bain and his public profile grew with an unsuccessful run for the United States Senate in Massachusetts, he continued to hang onto the humble houses in Houston, collecting rent and paying the mortgages. Then, in 1997, with real estate on a comeback, Mr. Romney appears to have decided to sell all five of them. Records show two were sold to local real estate investors, and three others to the people renting them.

When Mr. Stamps took the call from Mr. Romney, he and his wife, a nurse, had all but given up hope of being able to buy the house they had been renting for five years. Mr. Romney told him it looked like the couple had been taking good care of the property and that “we would be good people to buy it,” said Mr. Stamps. Mr. Stamps said he never heard from Mr. Romney again, and only became aware of who he was when he started running for president four years ago.

“His name came up somewhere,” he said, “and my wife and I said to each other, ‘That’s the guy we bought our house from!’ ”

Mr. Jolly, 76, laughed when told that Mr. Romney was still collecting mortgage payments on one of the houses he talked him into buying 30 years ago.

“That sounds like Mitt,” he said. “He never gives up.”

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