Florida Real Estate Loans Leave Company in Trouble

Federal regulators are in negotiations with the nation’s sixth-largest home builder to try to “preserve the assets of Norlarco members” in Florida.

The National Credit Union Administration is doing everything it can to keep assets of the members of Norlarco, including discussions with Hovnanian to make sure assets remain as high-valued as possible.

Norlarco Credit Union, the largest in Larimer County, Col., and eighth-largest in that state, was taken over by the NCUA earlier this year because of a mounting portfolio of delinquent real estate loans made in Lee County, Florida.

The credit union’s July report said its delinquent Florida mortgage loans totaled nearly $70 million, up from $54 million a month earlier.

The loans were made in the Lehigh Acres and and Cape Coral communities near Fort Myers, Fla., on homes built by First Home Builders. First Home was later acquired by K. Hovnanian, the nation’s 6th builder.

The loans were made just before the Southwest Florida housing market fell apart in 2006. Three credit unions that made construction home loans and Florida mortgages in the development were placed into conservatorship by federal regulators as their delinquent portfolios threatened their viability.

Deposits of up to $100,000 are insured by the NCUA, so there is no risk to most credit union members. The negotiations were first reported by Credit Union Journal, an industry newsletter.

NCUA has not attempted to foreclose on any of the delinquent loans made by Norlarco or the other credit unions.

Florida home prices have dropped in recent months, making it unlikely that NCUA could recoup anything near full value in current market conditions.

Hovnanian this weekend promoted a “Deal of the Century,” offering steep discounts on its real estate properties in Florida and elsewhere.

Hovnanian was offering homes in Lehigh Acres from $143,000 to $200,000. Most of the Norlarco loans, made at the height of the Lee County real estate market, were for more than $200,000.

SOURCE: The Coloradoan