FORT MYERS, Fla. - The legal exposure to the growing real estate speculation scandal in southwest Florida continues to mount for NCUA, even as the federal regulator prepares to sell off Norlarco CU, one of three failed credit unions that made as much as $500 million of loans in two developments near the Gulf of Mexico.
That's because the National CU Share Insurance Fund, which is expected to assume ownership of the loans, will be defending against dozens of suits brought by investors and contractors against the three credit unions and numerous other lenders, builders, developers and promoters in the huge scheme to sell "pre-leased" homes in Cape Coral and Lehigh Acres.
Last week, Norlarco was named in another new suit in U.S. District Court brought by builders in Cape Coral who say the lender has stopped paying its bills, according to Bill McFarland, a Florida attorney representing the contractor.
Among the defendants in the various suits are such well-known financial institutions as Countrywide Financial, Lehman Brothers, Bank of America, IndyMac and GMAC, as well as some of the nation's largest homebuilders. "This is going to take years to unwind," McFarland, told The Credit Union Journal yesterday, of the dozens of suits.
Yet another suit filed last week names New Horizons Community CU, the failed Denver credit union sold earlier this year by NCUA after the regulator assumed its failed loans. Another credit union participant in the land scheme, Huron River Area FCU, also is named in at least a dozen suits in state and federal courts.
NCUA on Friday announced it is seeking merger mates for Norlarco and is negotiating with three Colorado credit unions on a purchase and assumption agreement, in which the regulator would sell the healthy assets and assume the failed loans.
