FORT MYERS, Fla. – NCUA has entered the local real estate market here in a big way as it struggles to sell hundreds of properties it ended up holding from three large credit union failures: Norlarco FCU, Huron River Area FCU and New Horizons Community FCU.
The credit union regulator became the biggest landlord in the adjacent developments of Cape Coral and Lehigh Acres after it took over the three credit unions, which helped finance a get-rich-quick scheme known as “Millionaire University.” The venture promised unsophisticated investors a chance to earn a guaranteed 14% return by quickly flipping to-be-constructed homes.
NCUA is projecting a final loss on the failure of Norlarco, the one-time $320 million Fort Collins, Colo., credit union, to be $6.5 million, and for Huron River Area FCU, the one-time $360 million Ann Arbor, Mich., credit union, to be about $41.7 million. The losses at Denver’s New Horizons are much smaller.
The remnants of Huron River Area eventually were merged into Detroit Edison CU, which itself combined this week with NuUnion CU to create Michigan’s fourth-largest credit union with $1.5 billion in assets, called Lake Trust CU. The good assets and member accounts of Norlarco eventually were acquired by Public Service CU of Denver.
The failures, among the biggest ever in credit union history, have left NCUA holding 754 properties, of which 281 are for sale or rent, 254 are still in foreclosure, 34 in litigation and 185 are rented, according to John McKechnie, chief spokesman for the agency.
In addition, NCUA has made 158 loans to facilitate the sale of the properties.
“NCUA has hired a professional property management firm in Florida responsible for managing and maintaining all of the Florida assets,” said McKechnie. “We have a staff person onsite who is responsible for listing and evaluating our properties,” he said, adding that three NCUA employees at its Austin, Texas, Asset Management Assistance Center have primary responsibility for managing the Florida assets.
NCUA has sold about 200 of the properties over the past 12 months and hopes to sell another 150 in 2010, according to McKechnie. There were 38 sales in the just completed first quarter.
“We also have an active loan-to-facilitate program in place, which with interest income and net rents help to mitigate the holding costs,” he said. “At the appropriate time, NCUA plans to sell and portfolio these properties based on their income stream.”
