Banks to take back houses/lots from builder
January 6, 2010 by Aaron Kremer
Banks are taking back almost 100 building lots and partially built houses belonging to Prospect Homes, a local builder that filed for Chapter 11 bankruptcy protection in June.
The builder has not been paying interest on those loans, according to financial statements that must be filed with the bankruptcy court.
Most of the properties, which are located in suburban areas of the Richmond area, are worth about half as much as banks are owed, according to assessments in the bankruptcy court filing . Even in bankruptcy protection, the company is supposed to pay a host of banks a total of about $45,000 per month. Prospect has not paid since at least August.
The bankruptcy court is now letting the banks foreclose on the properties.
“In situations where we are trying to collect on debt, we use any way possible to maximize our recoveries,” said Jay Devoe, a vice president of lending for Regions Bank, which is trying to recover almost $5 million it lent Prospect.
Devoe said banks typically have several options to get their money back, including selling the note for the loan or foreclosing on a property and then hiring a Realtor to list the property. Sometimes buyers seek out the bank directly, he said, and that can mean the property gets sold without ever really hitting the market.
“Realistically, any of those options are still available,” Devoe said.
Wachovia Bank is taking back 35 properties, which include unimproved lots and completed houses. As of June, the bank was owed $4.9 million; $3.5 million of that was secured. The debt is greater than the approximate value of the properties by $1.23 million. Wachovia did not return calls seeking comment.
At the time of the initial filing, Franklin Federal was owed $2.1 million, $1.4 million of which was secured.
And Regions Bank is owed $4.9 million, $2.5 million of which was secured. The 57 houses and/or lots it is taking back are assessed at $1.8 million less than it’s owed.
The biggest block of lots is at the Lakeridge Green development in Hanover County. The lots have an approximate value of $37,000 and a principal debt of $65,000 each. There are also properties at Greenbrier Woods in Chesterfield and also in Louisa.
Nine lots are in the Avington section on Pouncey Tract Road, near Short Pump.
Prospect is also not paying unsecured creditors, who are owed hundreds of thousands of dollars each for work performed, according to financial statements filed with the bankruptcy court.
The business is still not breaking even. In October, the company brought in revenue of $839,000 and for the three months of August, September and October brought in $2.4 million. The company had a loss of $817,369 for that three-month period, with the biggest lost being $336,738 in October.
At the end of October, Prospect had total liabilities of $46.8 million and total assets of $28.3 million.
The developments with foreclosed property are:
Avington: West End of Henrico
Greenbriar Woods: Chesterfield
Lakeridge Green: Hanover County
Pondview: Farmville
Zehler Estates
Summer Lake:
Harpers Mill:
Hillcrest Farms:
Fox Creek: Chesterfield
Creekview:
Spring Creek: Louisa
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