South Florida Soon to Be Heavy With Foreclosed Condos

Posted on August 12th, 2009 in Foreclosure

The luxury hotel condominium Trump International Hotel and Tower in Fort Lauderdale, Florida is facing foreclosure, heavily burdened by unpaid construction loans amounting to $182 million.

The 24-story oceanfront hotel condominium, with 298 fully-furnished units, stands without a single tenant inside. The property is one of the 34 projects in South Florida financed by Chicago, Illinois-based lender Corus Bankshares Inc.

According to industry experts, deposits had been made on 70 percent of the condominium?s units. But the collapse of the real estate market caused some buyers to turn their backs on the deals or filed lawsuits on the property that is yet to open.

The condominium is part of the troubled loan portfolio of Corus Bank. As of May 31, Corus Bank?s troubled loan portfolio includes 14 outstanding loans on condominiums located in South Florida. Out of the 14 troubled loans, 12 were in default for more than 3 months already and in danger of becoming repossessed condos.

The delinquent construction loans in South Florida, with a combined amount of $1 billion, form almost 50 percent of Corus? $2 billion bad mortgages across the country. Last month, Corus warned that these bad loans may lead to its eventual failure.

Corus is already behind the June 18 deadline that regulators imposed for it to raise about $390 million for capital. Industry experts said that it would not come as a surprise if the Federal Deposit Insurance Corp. (FDIC) would seize control of the bank as soon as it finds a buyer.

According to industry analysts, one of the challenges facing the FDIC is that Corus? operation is similar to a real estate investment firm instead of a traditional bank. Corus, which has a total asset of $7.07, operates only 14 branches in Chicago.

Bank United Chief Executive Officer John Kanas said that the FDIC will have difficulty finding a buyer for Corus, adding that the bank has no franchise value because of the limited branch network. Additionally, majority of the bank?s 170,000 deposit accounts, totaling $7.1 billion, have one of the highest interest rates in the country.

Industry experts said that if companies would buy Corus? deposits and real estate assets, they would continue to pay the above-average rates.

But several private-equity companies and real estate firms, including Related Group of Coral Gables, have expressed interest to buy Corus assets. The bank has foreclosed properties amounting to $499 million on its portfolio and potential troubled loans totaling to $1.3 billion.

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