Foreclosures go high-end
Million-dollar homes, offices, show up on rolls
By John Rebchook, Rocky Mountain News (Contact)
Published July 11, 2008 at 9:05 p.m.
Photo by Darin Mcgregor / The Rocky
Piano player Chuck Smith entertains the residents at The Village at Saint Catherine. The village, which filed for bankruptcy to stop foreclosure, is now in sound financial shape, according to board chairwoman Kathleen Economos.
Photo by Ken Papaleo / The Rocky
The For His Glory Christian Fellowship in Aurora faces a $1.269 million foreclosure, public records show, but an attorney for the church said the foreclosure has been resolved.
The Village at Saint Catherine's, a retirement community in the Denver Tech Center, faced one of the biggest foreclosures in the metro area but settled with its lender.
The foreclosure tsunami is starting to sweep over some of Denver's most exclusive neighborhoods.
Homes priced at $1 million or more in places like Cherry Hills, Cherry Creek Country Club and LoDo are popping up more frequently on foreclosure rolls.
On a recent week, the Douglas County Public Trustee received six new filings for
$1 million-plus homes entering the foreclosure process.
And it's not just homes.
Senior centers, office buildings and even churches have been forced to deal with the threat of losing their million- dollar real estate to the lenders, forcing them to scramble to escape foreclosure auctions.
For example, the biggest health club in the metro area, the Lakeshore Athletic Club - Flatiron, was in foreclosure for about six months last year, before the $19 million foreclosure was withdrawn, according to public records.
An official at the Chicago-based developer said it sold the giant Broomfield club last year. That apparently resolved the foreclosure, one of the largest to hit the books in the metro area.
Tom DiMercurio is credited with coining the phrase tsunami REOS. REOs, or real estate- owned, is bank jargon for properties that they have acquired through foreclosures.
DiMercurio, principal of the Mercury Alliance, which specializes in selling REOs, said he correctly predicted that the first wave of the REO would primarily hit blue-collar workers.
"If they have even a temporary hiatus from their work - because of an illness, layoff or what have you - generally they don't have the resources to hold on," DiMercurio said.
But as the economy has weakened, and white-collar workers have borrowed too much from houses that have dropped in value, "this thing is moving up," he said.
DiMercurio estimated that homes in the $1 million or higher price range in the Denver area probably today account for less than 1 percent of the total foreclosure market. But in places like California, where there were virtually no foreclosures two or three years ago, it's common to find multimillion-dollar homes going back to the lender, he said.
"My prediction is we're going to see more of this," he said, noting that his company is handling a foreclosed $750,000 LoDo loft near Coors Field.
"The only market that is immune to that is the super rich," he said.
Celebrities hit, too
They may not be super rich, but on a national level, even celebrities have been in foreclosure.
Ed McMahon, the former sidekick of Johnny Carson, recently made the media rounds with his foreclosure tale in Beverly Hills.
Former star athletes such as Evander Holyfield and Jose Canseco, lost their homes in foreclosure auctions.
And Michael Jackson's Neverland Valley Ranch in California was enmeshed in a foreclosure, but the singer was able to reach a settlement with the lender before it was sold at an auction.
In fact, a large number of the expensive foreclosures in the Denver area seem to be escaping the foreclosure auction, at least so far.
Many homes that enter foreclosure, typically when the owner misses three mortgage payments, are not sold at a public trustee auction, the final stage of the foreclosure.
And owners of seven- and eight-figure properties many times have the resources to refinance their mortgages, sell their homes for more than the amount of the loan or come up with the needed cash by selling stocks or other real estate holdings.
Often, those lifelines are unavailable to someone in a low-paying job who has a less- than-stellar credit history and is saddled with a subprime mortgage.
The most expensive single- family home to face foreclosure in the metro area appears to have been an eight-bedroom, nine-bathroom, 12,172-square- foot home in Cherry Hills Farm.
But the owner paid off the $3.016 million due on May 16, according to records. At one time, the owner, who could not be reached for comment, had the home on the market for about $4.375 million.
One of the largest foreclosure filings in the metro area was for $8.4 million owed to a lender by Village at Saint Catherine assisted-living center in the heart of the Denver Tech Center.
But the center settled its financial woes and is on the right track, it says.
The center at 5555 S. Yosemite St., filed bankruptcy last year to stop the foreclosure, according to its attorney, Caroline C. Fuller of Fairfield & Woods.
"There were two issues: cost overruns of construction of the facility, and it wasn't reaching its occupancy levels as fast as consultants had predicted," which led to the foreclosure, Fuller said.
But Fuller was able to reach an agreement with the lending group, PAMI, an entity created by Lehman Bros. In the near future, the loan on the project likely will be refinanced, and the foreclosure will be withdrawn, Fuller said.
St. Catherine officials initially balked at discussing the foreclosure because they worried that negative publicity could hurt it.
But Kathleen Economos, chairwoman of the board and a volunteer at the center, decided it was best to be upfront, in case any current or potential clients got wind of the foreclosure and bankruptcy and were unnecessarily concerned.
"All of our bills are paid, and we are putting money in the bank," Economos said. "We are in very sound financial shape. We are very happy with the way things turned out."
The center opened in August 2005. It has 63 units and 53 of them are filled, with monthly rents ranging from $2,300 to $4,400. The average age of a resident is 83. Most of the residents have children who live in the area but are often from outside of Colorado.
The original financing came from the Department of Housing and Urban Development. And although the deal was put together by the adjacent St. Catherine Greek Orthodox Church, only six of the residents are of that faith.
Church seeks resolution
Less willing to discuss his situation on the record is the Rev. Tom Jones, pastor of the 600-member For His Glory Christian Fellowship in Aurora. According to public records, the church is facing a $1.269 million foreclosure.
But the church hasn't missed a beat, offering regular services and programs, including a basketball camp. It will soon provide day-care services.
Jones referred questions to his lawyer, Dwight Taylor, who said the foreclosure has been resolved. Public records don't show it has been withdrawn because of a forbearance agreement that requires the church to continue to make regular payments until next May. It likely will refinance the existing loan before that time.
"In the agreement with the lender, both parties have agreed not to disparage each other," Taylor said. "So we ought to lay low on this one. I'll just say things happen and people misunderstand things, and that is how it got to where it was."
Country club feels pinch
One place that has been hit hard by high-end foreclosures is the Cherry Creek Country Club, at 2405 S. Yosemite St.
There are at least six homes in foreclosure in the club priced from $1 million to almost $2.5 million, according to the Arapahoe County Public Trustee.
The centerpiece of the club is a golf course designed by Jack Nicklaus.
A lot of the homes were "over- financed" and builders kept constructing new, spec homes, driving down the values, said Amy Bachelder, owner of PorchLight Real Estate.
"It is a really nice area, and it will rebound when the supply goes down," she said. "It all comes down to supply and demand. That is why we are seeing almost no foreclosures in Washington Park or Country Club or Hilltop. You can't have the kind of over-supply in those neighborhoods that you can in other neighborhoods."
Dave Marshall is president of Landmark Custom Homes, one of the builders in Cherry Creek Country Club. Some of his homes and land parcels are in foreclosure there, according to records. Marshall said deals are in the works to sell them, and they won't go to auctions.
He said well-qualified buyers who deal with custom builders will be able to negotiate the best deals in years.
"Once it goes to the bank, the individual buyer loses the ability to buy the home they might have wanted," Marshall said. "The homes are quickly whole- saled to investors, which leaves the public out of it."
And while sales there are not red hot at Cherry Creek Country Club like they were three years ago, in some recent months it has out-performed sales in more established areas such as the Preserve in Greenwood Village.
Marshall noted that it can take 18 months to 24 months to complete an ultra-expensive house from start to finish.
And two to three years ago, when the luxury market was still thriving, builders were forced to pay lot premiums for the best sites.
"No one saw how severe the coming recession and (the) mortgage loan meltdown would be," he noted.
"This slow-moving market is leading to some foreclosures in the upper end," Marshall said. "It is bound to happen. However, so far, it has been at a minimum. Ironically, it happens more in the best developments because that is where the most homes were built."
Some notable filings
* The Crescent V office building in the Denver Tech Center was in an $8.76 million foreclosure for two months in 2004. The Pauls Corp., headed by Bill Pauls, the former president of the Tech Center, bought the note from KeyBank, when the then-owner, a California partnership, was in default. Later, the building was sold to Denver-based Miller Global Properties, which last year sold it for $19.95 million to Principal Real Estate.
* A $1.9 million foreclosure has been filed against the Foothills Shopping Center at 13139 W. Alameda Parkway. The foreclosure sale has been continued until July 23, and the last possible date for a sale without a bankruptcy is May 21, 2009.
* A $1.377 million foreclosure was filed against the Center at Evergreen, 2914-2918 Evergreen Parkway on May 29. The foreclosure sale is set for Sept. 24.
* A $1.306 million foreclosure was filed against the Lutheran Church of Resurrection, 1175 S. Reed St., on Feb. 21 and was withdrawn on June 20.
* A $1.02 million foreclosure was filed on April 29 against the Belmar Office Tower, 7551 W. Alameda Ave. The foreclosure sale is scheduled for Aug. 27. The last possible date for the sale, without a bankruptcy, is Aug. 27, 2009.
* Owners of a 12,172-square- foot home in Cherry Hills Farm owe $3.106 million. It is being listed for about $4.3 million by Fuller Towne and Country.
* Homes in Cherry Creek Country Club in foreclosure:
Country Club Construction LLC, 2736 S. Boston Court., $2.497 million; Landmark CM Ltd., 9395 E. Harvard Ave., $2.497 million; Country Club Builders LLC, 2765 S. Boston Court, $2.497 million; Landmark Custom Homes Ltd., 9297 E. Wesley Ave.,$2.42 million; Country Club Builders LLC, 2481 Yosemite St., $2.206 million; David K. Marshall, 9001 E. Vassar Ave.; $1 million.
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July 12, 2008
12:17 a.m.
Suggest removal
underthebusinvestments writes:
Don't worry, Uncle Sugar is set to bail out these find folks! I guess in an under-the-bus capitalism system, profits are privatized and losses are socialized!
Don't get thrown under the bus!
-The Bus Driver
July 12, 2008
9:12 a.m.
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SockRayBlue writes:
Wow! Who would have thought that speculators and a bunch of get rich quick whizzes could have brought this country to the brink of destruction. Add ignorant politicians and you have a party for fools. No one seems to realize that life takes hard work and planning.
Go figure.
July 12, 2008
9:52 a.m.
Suggest removal
BMat writes:
Look closely at the picture of the "For His Glory Christian Fellowship Church." The only two cars parked there are a brand new Range Rover and a red convertible Benz!
I find it hard to feel empathy for the jewelry laden, luxury car drivin' evangelical Xtian leaders that pay no tax and drive movie-star automobiles while their real estate is teetering on foreclosure.
Hypocrites! Repent today!
July 12, 2008
12:47 p.m.
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fastnloose writes:
I love these times!People who had the need to fill there greed,are getting caught with their pants down.
July 12, 2008
1:15 p.m.
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TMcna82298 writes:
I think homes should be smaller and take up less space. Many of the homes are too big. They require too much material to make. and most people can't afford them. Regarding this story; the people who bought these properties, were assuming that they would have enough resources. They made a mistake, and now they are going to pay!
July 12, 2008
3:22 p.m.
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Diatribe writes:
fastnloose and everyone else...
It's great to see those who wanted to "flip this house" for a quick buck exposed. But they're not the only ones with their pants down. When you hear all this talk of subsidizing lenders/homeowners, preventing insolvency, etc - where do you think the money's gonna come from? Borrow agains social security? Sorry, Clinton already did that years ago and there's hardly enough left to fund the baby-boomers. The Federal Reserve? Was that supposed to be before or after Bear Stearns collapse? The Treasury? - Oops all gone. And before this is all done, Fannie and Freddie are gonna need bailing out as well. All so that the richest speculators don't lose their shirts.
Guess what guys, it'll be you and me and the common citizenry (our hard earned tax bucks) that'll be used. And so sure, the rich guys will be caught with their pants down, but just as they stick it to working class.
July 12, 2008
5:16 p.m.
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Dinty writes:
"foreclosure tsunami"? These gloom and doom reporters just keep coming up with more sensational adjectives don't they? Most of these foreclosures were nothing more than bad financial decisions made by irresponsible people. Nobody to blame but themselves. I don't care how many zeros you add to the house value, it's the same old scenario. I just don't feel sorry for people who mortgaged themselves to the max, betting on rising values, and then it didn't come through. Everyone talks about the poor folks who "lost their homes". They didn't lose anything. They had no equity. They just lost the right to effectivley rent the property.
July 12, 2008
5:22 p.m.
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HolierThanThou writes:
Offshoring jobs has a ripple effect through the entire economy. The only Americans who win when American jobs are offshored are the super-rich billionaires doing the offshoring.
Trampling the working class to save a buck or increase the size of an executive bonus robs more than just the workers who are downsized or suffer pay cuts. Markets dry up and business suffer losses as customers can no longer afford your products and services.
That's one reason why this business owner supports unionization of the American workplace and a firing squad for executives who offshore jobs or flood the labor market with illegal immigrants. Seems ironic but those are the very business practices that are destroying our economy.
The poor people of a nation are like canaries in the coal mine. When they quit singing and drop to the bottom of the cage with their feet up, we're all in trouble. Now the gas is getting to some of the high and mighty.
Wake up! If you're not super-rich then you're too poor to vote for conservatives.
July 12, 2008
5:58 p.m.
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fastnloose writes:
Let's don't forget all those people who refinanced their homes,over and over.Each time draining every penny of equity they possibly could out of their homes.Plus adding time onto the loan.
I feel sorry for many families struggling to pay for 4 dollars a gallon gas,as we had nothing to do with the lack of energy policy this country has had for the past 40 years.But when it comes to the mortgage business,don't take the money unless you fully understand the terms of payback.Rule 101 in handling money,something most of us learned in 1st grade or from a wise grandpa.
July 12, 2008
8:22 p.m.
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ta_rich writes:
TMcna82298,
Feel free to buy or build any size house you like and the rest of us will do the same. Feel free to allow others the opportunity to make best choices for themselves. As soon as this country dictates the size, location, materials, and floorplans of the homes we are permitted to live in is the day we have become a socialistic failure.
July 12, 2008
10:25 p.m.
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Diatribe writes:
Anyone can build any size house they can afford, I don't care. Just don't make me pay for it at the end.
July 13, 2008
6:32 a.m.
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roger44 writes:
Agree with BMat, must be the vehicles of the leaders of the church. They say for God's glory, it's for their own. Kenneth Copeland just like that, $20 million airplane he said God wanted him to have. I just don't figure how people can give money to such greedy Preachers. Stupid people....
July 13, 2008
6:34 a.m.
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WarrenJimmyBuffett writes:
"No one saw how severe the coming recession and (the) mortgage loan meltdown would be," he noted
Bubbles pop and quickly collapse. Builders and mortgage "bankers" chose not to see what the logical conclusion to their overbuilding and loose lending would be. Just because these euphoric industries wouldn't anticipate the problems they were creating doesn't mean other couldn't see it. The smart money did and got out early.
July 13, 2008
8:46 a.m.
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irisman writes:
Interesting how perceptions change when the wealthy are affected. When the subprime meltdown started, most of the editorial writers and online commentators wrote that is was all the fault of people buying houses they couldn't afford, or not being prepared for adjustable rate mortgages, or not reading the fine print. Most everybody agreed that those folks didn't deserve any sympathy and shouldn't expect the government to bail them out. Now that wealthy people are starting to feel the pain, it's officially a major crisis, and the government must immediately step in with a bailout that will amount to many billions of dollars. The people who will benefit the most from the bailout are the same ones that started the crisis in the first place. I'm sure there are people reading this paper who remember the savings and loan fiasco of the 1980's.
July 13, 2008
11:14 a.m.
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bitwranglers writes:
When you don't allow fools to fail from their own greed, you break capitalism. You've created a socialist state that rewards only the select few.
July 13, 2008
12:21 p.m.
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irisman writes:
Beautifully said, Bitwranglers. I think all these shenanigans must have Adam Smith spinning in his grave.
July 13, 2008
7:51 p.m.
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BikerChick writes:
..
Whenever you hear Realtors telling anyone that the worst is over... push their stupid nose in this.
Telling lies and practicing denial makes things worse.
The mess will bottom-out in the year 2011... after the paper-value of the homes drops 40% to balance the big picture.
Bailing out the stupid folks on both sides with YOUR MONEY is to teach these clowns that it is OK to do it again and again. Is this how you raised your kids ?
..
July 14, 2008
5:17 p.m.
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duncandog writes:
Traditional Realtor's bare a very small burden of what happened. Stupid consumers and aggressive mortgage brokers are the real culprit
Real Estate agents saw nothing but a sale with most of these customers. But is it their job to tell us what loans may not be that good 3 years later? Probably not. Most agents during that time got into selling real estate because they thought it would be an easy way to make money. Why? 2 reasons. 1) Being a Real Estate agent requires no real skill, and 2) They charge way too much money to do it.
When a realtor is staring at a $10,000 commission when you buy a home, they tend to be a little less of a watchdog when it comes to your loan.
I bought my house recently with ReLogic, and they charged me a small fee (like an attorney would) and gave the rest of the commission back to me. It was a wonderful experience. Even though I didn't expect the advise, they told me to be very cautious about a few things including my loan. A real estate agent should be a consultant and not a salesman working on commission.
July 15, 2008
3:03 p.m.
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fastnloose writes:
Duncandog-Thats a big part of the problem.Everyone involved in the transaction is on comission.Realtor,mortgage broker and sometimes the appraisor even has a hand in using loose numbers.Blanket all this with greed and hold on to your socks.
July 27, 2008
8 p.m.
Suggest removal
bph writes:
We are all adults. Read the documents and know you are not getting in over your head before signing. Nobody had a gun to their head when signing closing documents.