Fitchburg Project Pinched By IndyMac | The long arm of bank failures
For the past year, not one unit at the Falls at Arden Mills condominium development in Fitchburg has been sold. And it’s not just a question of the rotten housing market.
John Hoey, the ReMax real estate agent who handles the property, says he’s actually forbidden from selling the condos. That’s because the construction of the project was financed by the now-defunct IndyMac Bank. When the California bank went under in July 2008, the FDIC took over its assets. But Hoey said the government agency won’t sign releases for the sale of units, and, since the construction loan was structured to be paid off incrementally as units are sold, that means there’s simply no way to make a sale.
The FDIC sold the former bank’s assets to the newly created OneWest Bank of California in March, but there has still been no forward motion on getting anyone to sign off on leases.
“My understanding is that even if someone came with a shoebox full of cash we would not be able to accept it because there’s nobody there to accept a partial pay-off of that loan,” Hoey said.
So far, he said, he’s turned away four potential buyers.
Of course, that leaves Arden Mills, a project of Bridgewater’s Global Property Developers Corp., in an even worse position than most struggling condo developments. It was permitted for 204 units, and so far one building with 48 units has gone up, and just 13 of the condos have been sold. Steve Callahan, president of Global Property, said dealing with the FDIC was “just chaos. There’s no one to talk to. We tried for months and months to get some information.”
Since around the start of the year, Hoey said, he’s been leasing the units instead, and so far nine more are occupied that way. That leaves three condos available for lease, with another 23 in the building not fully finished.
“The idea right now is to continue to generate some revenue stream so we can mow the lawn and keep the lights on in the building and plow the snow,” Hoey said.
“I wish we had started renting them a year ago,” Callahan said. “It’s been easy to rent them.” The development is also offering an informal lease-to-own option. When the units become saleable again, current renters will be able to put 50 percent of what they’ve paid in rent toward a purchase. But Hoey said there’s no knowing what prices will look like when that happens. He said some renters would also like to take advantage of the federal tax credit for first-time homebuyers, but they don’t know whether a purchase will be possible before the credit expires at the end of the year.
Hoey said he’s hoping someone at the agency or a successor bank will start actively managing the loan soon but imagines that could take anywhere from another month to another year.
“They’re very nice, but there’s still not a lot of information,” Callahan said of OneWest. “But at least I have a contact.”
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