ALEXANDRIA, Va. – NCUA decided to pull from the market a $26 million package of distressed Florida real estate loans originated by failed Huron River Area FCU due to a lack of adequate offers.
As a result, NCUA is left holding more than 1,000 Florida loans worth about $210 million from Huron River Area FCU and Norlarco CU, which both failed last year because of their involvement in two speculative south Florida real estate developments in Cape Coral and Lehigh Acres. The credit union agency also could end up with a dozen more loans in the Florida developments valued at $3 million that were originated by a third credit union failure, New Horizons Community FCU.
NCUA put the Huron River Area loans on the market with distressed asset seller DebtX to test the demand. But the loans, about 130 residential mortgages, were pulled because of an inadequate response, according to Michael Barton, director of the agency’s Asset Management and Assistance Center.
“It’s difficult to sell them, even in bulk, because the major lenders do not have a big appetite for this stuff. They already have enough of it on their books,” Barton told The Credit Union Journal yesterday.
There has been interest by other parties who see value in the distressed loans, but the market conditions have made it difficult to finance a purchase, he added. “It’s not that they [potential buyers] aren’t willing to pay. We’ve had offers, but they couldn’t get financing.”
While the market continues to stagnate, NCUA will hold the assets and manage the Florida property in hopes that conditions will improve. A sale of the credit union loans in packages still is an option.
