I feel compelled to post this article in full. This is the issue which I have been trying to alert readers to for at least a year now. The problem is this. These lawyers only got it half right. A short sale is usually just as bad as a foreclosure. That's right. Most short sales (in fact, it is Bank of America's stated policy) provide that the seller is still liable for a deficiency.
Foreclosed homeowners may still have debt to pay
Jeff Baum is at the forefront of a real estate industry trend that is sure to cause more pain for homeowners who thought they had left their troubles behind. Baum, a principal with Green Circle Capital Group in Boca Raton, brokers the sale of nonperforming residential debt between lenders and investors. Those investors buy the debt with the intention of collecting from the former homeowners.
“I’ve made quite a bit of my living over the last two, three years selling deficiency balance paper,” said Baum. A deficiency balance is the portion of the mortgage loan that wasn’t covered by the sale of the home. That debt becomes an unsecured note similar to other consumer debt such as credit cards. Hedge funds, servicing companies and collection agencies pay cents on the dollar for the unsecured debt. Their collection efforts mean more problems for former homeowners who failed to pay off their mortgages after a short sale or a foreclosure during the 2-year-long residential real estate crisis.
Investors will likely be more aggressive than lenders in going after the debt “to get a more advantageous rate of return than the larger institution would be willing to put the effort in,” said Baum, who formerly worked in SunTrust Bank’s residential mortgage-backed securities unit.
Mortgage holders or the debt buyers have up to five years from the time the loan goes into default to sue to collect the debt. The practice has its critics within the lending industry. Miami-based Republic Federal Bank doesn’t sell deficiency debt, said Jim Angleton, the bank’s senior vice president. But Angleton predicts other lenders will seize the opportunity.
“As the market declines, it is going to be more in vogue: institutions trying to sell the debt and debt collectors trying to create another niche for themselves,” he said. “Those [debt collectors] are not even bottom feeders, they are subterranean feeders. They are in the Dracula mode of blood sucking.”
Republic doesn’t go after borrowers for deficiencies unless they have other assets that can be tapped into, Angleton said. In about 25 percent of the cases, the bank goes to court to get deficiency judgments, he said.
COLLECTION CRISIS
Real estate attorney Daniel Kaskel said many people who lost their homes may face a collection crisis. Last month, one of his clients closed on a short sale that generated enough money to cover most of the first mortgage of about $245,000. But proceeds of the sale weren’t enough to pay off a second mortgage of about $174,000, said Kaskel, with Sachs Sax Caplan in Boca Raton.
Chase, which held the second mortgage, agreed to release its lien from the property for the sale to close, but it held the borrower responsible for the deficiency, according to Chase’s letter to Kaskel’s client. If Chase sells that deficiency debt to a debt collector, the former homeowner can expect to have to come up with the money plus interest.
“I make my clients aware of this [threat,]” Kaskel said. “In some situations, they would rather do the short sale, move on and worry about any deficiency when they get a phone call from a debt collector.” If his client hadn’t done the short sale, the house would have been lost to foreclosure and the client would have ended up owing the balance on the first and second mortgage, he said.
“In a short sale, at least the seller has some control over it,” said Kaskel, who negotiates with lenders on behalf of doctors, lawyers and other professionals that make more than $300,000 a year. His clients worry about being pursued by debt collectors because many have other assets that could be targeted to satisfy a deficiency, he said. “These are not [economic] hardship cases,” he said. “These are people who do not want to remain in a situation where it will take eight years of paying the mortgage for their homes to be worth what the mortgage is worth,” he said.
DEFICIENCY JUDGMENTS
After winning a foreclosure action, a lender has up to five years to ask a judge to declare a deficiency judgment. The judgment amount is the difference between the loan and the market value of the home on the day it sold at a foreclosure auction. Once they are awarded the judgment, lenders can sell it to debt collectors, said Miami attorney Lewis Cohen, a partner with Cohen & Bobota. Many of his clients are banks.
“A bank usually would walk away from the debt rather than throw more money to collect something that is uncollectable,” he said. “So, why not sell it for 25 cents on the dollar?” Judgments are good for 20 years, and while people may be broke now, their financial situations could improve in the next two decades, said Richard Zaretsky, a West Palm Beach foreclosure defense lawyer. The dormant debt may come back to haunt them, he said.
Judgment holders, like collection agencies, can force people into court yearly to disclose their finances, said Zaretsky. Attorney Thomas Willis, with Shuster & Saben in Miami, says the problem will increase over the years.
“Can you imagine, as people’s finances are beginning to improve — boom! — they get hit with a collection action for tens if not hundreds of thousands of dollars,” he said. “You are going see a lot of people having to declare bankruptcy.” Since the only way to deal with a deficiency judgment is to pay the debt holder or declare bankruptcy, that’s already happening, according to Miami bankruptcy attorney Joel Tabas, with Tabas Freedman Soloff Miller & Brown. “A lot of people are filing bankruptcy to get out of the deficiency obligation,” he said.
The best way distressed sellers can protect themselves is to negotiate a reduction in the deficiency balance or persuade lenders to waive their rights to collect deficiencies. Miami real estate broker Ross Milroy recently brokered a short sale in which Bank of America demanded the seller sign a note for $25,000 to cover a loan deficiency. The seller, who owned a condo in the Grandview Palace in North Bay Village, showed the lender that he was unemployed and disclosed his limited financial resources. “So they waived the $25,000 note, and we proceeded to close,” said Milroy, managing broker of Miami Angel Properties.
Willis, with Shuster & Saben, said sellers need to be aggressive with banks. “Your bargaining position is much better if you pro-actively try and resolve the situation now rather than waiting later down the road,” he said.
INFLEXIBLE LENDERS
Some lenders won’t bend, said Davie real estate broker Patty Da Silva. Recently, a client found a buyer for a home for about $181,000. The property had a mortgage for nearly $500,000. The lender approved the sale but held the seller liable for the outstanding balance, said Da Silva, owner of Green Realty Properties. Her client could be subject to a judgment, she said.
Baum said many people, including attorneys, are not aware of the sellers’ rights and obligations. A homeowner that walks away from a property is still responsible for the debt, he said. “A lot of times, I run into individuals who let their properties go into foreclosure or did a short sale and they think they are released from their obligations,” he said. “But they are not.”
Sunday, October 25, 2009
Saturday, September 12, 2009
Do Not Just Walk Away!!
While it’s now well accepted that well over 90% of Florida homeowners in foreclosure are just walking away, it is now becoming apparent that the "other shoe is yet to drop." As I have said over and over on this blog, if you have no assets and have nothing to protect, that's probably OK. BUT, if you do have assets, this will prove to be a big mistake.
Until now, there has been some uncertainty whether the banks were going to pursue deficiency judgments from Florida homeowners. Well the evidence is becoming clear that many banks will pursue and ARE NOW pursuing these Florida judgments post-foreclosure. (I know this for a fact. I have a friend who buys them in bulk from banks for pennies on the dollar.)
For the uninitiated, in Florida and other “recourse” states, a Bank would be entitled to obtain a judgment against you for the difference between the mortgage amount and the value of the property. In other words, if your Florida real estate property is worth less than the mortgage the Bank can come after you for the difference. In non-recourse states, like California, the Banks can not do that. Florida is a recourse state and the Banks may have up to five years to bring the action. Moreover, the bank has up to 20 years to enforce this judgment. Do you really want a bank pursuing you and trying to hunt you and your assets down for 20 years?
There are many law firms out there who claim to be "aggressively" defending Florida foreclosures. But what does this mean exactly? Almost all of them are doing nothing more than delaying the foreclosure. Then what? Well, if your goal is just to stay in the house for a while without paying your mortgage, then that works for you.
BUT, if you are an investor - or you have assets to protect - or you are simply at that stage in life that requires, shall we say, a more responsible approach, my advice is (1) do not simply "walk away" and ignore the foreclosure, and (2) avoid those bottom-feeder law firms that are ultimately just playing the delay game.
Until now, there has been some uncertainty whether the banks were going to pursue deficiency judgments from Florida homeowners. Well the evidence is becoming clear that many banks will pursue and ARE NOW pursuing these Florida judgments post-foreclosure. (I know this for a fact. I have a friend who buys them in bulk from banks for pennies on the dollar.)
For the uninitiated, in Florida and other “recourse” states, a Bank would be entitled to obtain a judgment against you for the difference between the mortgage amount and the value of the property. In other words, if your Florida real estate property is worth less than the mortgage the Bank can come after you for the difference. In non-recourse states, like California, the Banks can not do that. Florida is a recourse state and the Banks may have up to five years to bring the action. Moreover, the bank has up to 20 years to enforce this judgment. Do you really want a bank pursuing you and trying to hunt you and your assets down for 20 years?
There are many law firms out there who claim to be "aggressively" defending Florida foreclosures. But what does this mean exactly? Almost all of them are doing nothing more than delaying the foreclosure. Then what? Well, if your goal is just to stay in the house for a while without paying your mortgage, then that works for you.
BUT, if you are an investor - or you have assets to protect - or you are simply at that stage in life that requires, shall we say, a more responsible approach, my advice is (1) do not simply "walk away" and ignore the foreclosure, and (2) avoid those bottom-feeder law firms that are ultimately just playing the delay game.
Saturday, September 5, 2009
Is Ginn Sur Mer the Next to Fall?
THE BAHAMA JOURNAL
September 4th, 2009
Old Bahama Bay Temporarily Closing
While the Isle of Capri was making waves with the announcement that Treasure Bay will be its new owners, Old Bahama Bay in West End was –at the same time - reportedly closing on Tuesday for one month.
According to a statement released by Old Bahama Bay on Thursday, the resort will use this time period to conduct scheduled maintenance work in keeping with a commitment to maintaining quality standards and service.
Vice President of Communications for Ginn Sur Mer Ryan Julison told our news team employees who haven’t taken vacation yet will be paid for the month off and those who have already taken vacation will not be paid.
Rumours have been swirling for months about the permanent closure of the resort, to which management has repeatedly denied.
In July, it was reported that low occupancy resulted in the layoff of 85 employees.
September 4th, 2009
Old Bahama Bay Temporarily Closing
While the Isle of Capri was making waves with the announcement that Treasure Bay will be its new owners, Old Bahama Bay in West End was –at the same time - reportedly closing on Tuesday for one month.
According to a statement released by Old Bahama Bay on Thursday, the resort will use this time period to conduct scheduled maintenance work in keeping with a commitment to maintaining quality standards and service.
Vice President of Communications for Ginn Sur Mer Ryan Julison told our news team employees who haven’t taken vacation yet will be paid for the month off and those who have already taken vacation will not be paid.
Rumours have been swirling for months about the permanent closure of the resort, to which management has repeatedly denied.
In July, it was reported that low occupancy resulted in the layoff of 85 employees.
Thursday, August 13, 2009
Half of All Mortgages Are "Underwater"
"Underwater" Mortgages to Hit 48% says Deutsche Bank
Aug. 5 (Bloomberg) -- Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said.
The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report today. As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties, according to Deutsche Bank. Further deterioration will depress consumer spending and boost defaults by borrowers who face unemployment, divorce, disability or other financial challenges, the securitization analysts said.
“Borrowers may also ‘ruthlessly’ or strategically default even without such life events,” they wrote. Seven markets in states with the fastest appreciation during the five-year housing boom -- including Fort Lauderdale and Miami, Florida; Merced and Modesto, California; and Las Vegas -- may find 90 percent of borrowers underwater, according to the report. The share of borrowers owing more than 125 percent of their property’s value will increase to 28 percent from 13 percent, according to Weaver and Shen. Home prices will decline another 14 percent on average, the analysts wrote.
Tuesday, August 4, 2009
Thoughts on Golf Channel Ginn Segment
Tonight's segment on Golf Channel didn't tell us anything we don't already know - and it may have disappointed owners in resorts other than Bella Collina. But it certainly is bringing the Ginn fiasco to light. It also serves to debunk the myth still being held onto by some Ginn groupies that this was all just a product of the poor Florida real estate market . . . or the nonsense that investors got what they deserved.
I like this promo I came across:
Rise and Fall of Real Estate Mogul Bobby Ginn on Golf in America
Bobby Ginn: Real Estate Bust -
Bobby Ginn was a real estate mogul who developed numerous resorts and communities during the real estate boom in the 1990's. His Ginn communities were marketed as the ultimate in upscale golf luxury, and Ginn parlayed his sponsorship of professional golf tournaments - including the Ginn Championship at Hammock Beach, the Ginn Open at Reunion and the Ginn sur Mer Classic at the Conservatory - to lure investors. Now, with unfinished clubhouses and neighborhoods in foreclosure, he is thought to be hiding out in the Bahamas. A whistle blower will sit down with GOLF CHANNEL’s Rich Lerner to discuss the real estate bust and what it means to the world of golf. (my emphasis)
It looks like Bobby is finally being viewed as the scoundrel he really is, rather than the visionary BS we've been fed. The kool-aide is finally wearing off.
I like this promo I came across:
Rise and Fall of Real Estate Mogul Bobby Ginn on Golf in America
Bobby Ginn: Real Estate Bust -
Bobby Ginn was a real estate mogul who developed numerous resorts and communities during the real estate boom in the 1990's. His Ginn communities were marketed as the ultimate in upscale golf luxury, and Ginn parlayed his sponsorship of professional golf tournaments - including the Ginn Championship at Hammock Beach, the Ginn Open at Reunion and the Ginn sur Mer Classic at the Conservatory - to lure investors. Now, with unfinished clubhouses and neighborhoods in foreclosure, he is thought to be hiding out in the Bahamas. A whistle blower will sit down with GOLF CHANNEL’s Rich Lerner to discuss the real estate bust and what it means to the world of golf. (my emphasis)
It looks like Bobby is finally being viewed as the scoundrel he really is, rather than the visionary BS we've been fed. The kool-aide is finally wearing off.
Ginn on Golf Channel Tonight
I wanted to make sure everyone is aware that the golf channel is running a segment on Ginn August 4 at 10 pm EST on its Golf in America show. If you want more info, go to www.golfchannel.com, look under tv shows.
It was promoted heavily during the Buick Open last weekend.
I love the byline:
The Ginn bust: A promise unfulfilled or possible fraud: What it means to the world of golf.
It was promoted heavily during the Buick Open last weekend.
I love the byline:
The Ginn bust: A promise unfulfilled or possible fraud: What it means to the world of golf.
Saturday, May 23, 2009
New York Times Article On Ginn
May 24, 2009
It’s Tee Time. Where Is Everybody?
By GERALDINE FABRIKANT
Montverde, Fla.
OFF the turnpike here in central Florida, hidden behind stucco walls, sits a sprawling Tuscan-style clubhouse on a hill overlooking a string of lakes, a golf course and green fields.
This 1,900-acre property, called Bella Collina, was designed to hold 800 homes. Today, only 48 houses dot the landscape, and just three are occupied. The clubhouse, though open, is eerily quiet, and a promised swimming pool and equestrian center have yet to be built.
Bella Collina, the brainchild of Robert Edward Ginn III, looks like a ghost town. So does Tesoro, another resort opened by Mr. Ginn near Port St. Lucie, where just 150 houses sit on 900 lots. And the Conservatory in Palm Coast, also from Mr. Ginn, is even more barren: 335 out of 340 lots are empty.
As the real estate boom expanded in recent years, developers and home buyers believed that residential golf resorts were a sure-fire bet. Many buyers looked to buy properties that they could flip for a quick profit. Others were lured by stunning views, club services and security. While there is no reliable data on the growth in residential golf resorts, analysts say the market is well past its peak — particularly in the Sun Belt — and there is now an overabundance of developments.
“The aggressive building of new resort courses continued from the mid-1990s into the 2000s, contributing to an increasing glut of inventory that finally found no market,” said Joe Beditz, chief executive of the National Golf Foundation, a trade group that tracks data on the golf industry.
Mr. Ginn, 60, was able to cash in on the boom despite a spotty record that included some well-publicized failures on Hilton Head Island, S.C., in the 1980s. But when the real estate market began to tank in 2007, his empire came undone. “As property values plummeted, many investors had property worth less than their loans, and they were unprepared to pay their club and association fees,” says Toby Tobin, a Florida real estate agent.
Other golf resorts are also struggling. WCI Communities, which built resorts in Florida, Virginia and the Northeast, filed for bankruptcy in August. So did the Yellowstone Club in Big Sky, Mont., and three other resorts that, like some of Mr. Ginn’s, had loans arranged by Credit Suisse. Even the venerable Greenbrier Resort in West Virginia has sought bankruptcy protection.
For Mr. Ginn, a man who could sell 400 lots in a single day during the height of the real estate boom, it has been a huge comedown. While other developers may have built more golf resorts, few did so as grandly or as extravagantly. The tab for the 116,000- square-foot clubhouse at Tesoro reached $48 million.
“Most developers used consultants,” recalled Dean Adler, co-founder of Lubert-Adler Partners, a private equity firm in Philadelphia that invested in Mr. Ginn’s projects. “Bobby had a feel. He could be handed a topography map at a site and sketch out the entire resort.”
An amiable Southerner with a casual personal style, Mr. Ginn was a virtuoso at selling investors his vision of the luxe lifestyle.
“Bobby is very smooth and very likable,” said Hilton Wiener, a lawyer who bought an investment property at Tesoro. “He is a down-home guy who is not a pushy kind of salesperson.”
But when a new resort was in the works, Mr. Ginn knew how to generate a buying frenzy by holding lavish parties where potential buyers greatly outnumbered available lots, say agents and investors who attended the events.
“You would come to one of Ginn’s sales weekends and you would be drinking and thinking, ‘I hope I get chosen as one of the select few who gets to buy a lot,’ ” Mr. Wiener recalled. “The setting is very lush: hand-rolled cigars, fancy parties, vans with the Ginn name plastered on them.”
The high times ended when the market turned two years ago. Sales stalled, and Mr. Ginn had trouble paying off loans. Two of his properties, Tesoro and Quail West in Naples, Fla., filed for bankruptcy in December 2008 and were later sold for a fraction of what he had put into them. He sold Laurelmor, a resort in North Carolina, to another developer for $32 million. Mr. Ginn’s network of companies still owns the facilities at Bella Collina and the Conservatory.
Not all of Mr. Ginn’s 13 golf resorts are in such dire straits. But even at some of the most successful, like Reunion near Orlando, the Ginn Companies is considering programs to attract more buyers by offering fractional ownership at lower prices.
Mr. Ginn says his remaining properties will eventually pay off. “My belief is that when the depression ends, there will be a pent-up demand for happiness,” he said in an interview at his offices at the Hammock Beach Resort near Daytona Beach. “Sometime between 2035 or 2040, Florida will double in size.”
In the meantime, he faces dozens of lawsuits from angry investors alleging that his companies used deceptive and misleading trade practices in representing the demand for and value of his properties. “We will vigorously defend against these false allegations,” Mr. Ginn said.
BOBBY GINN grew up in Hampton, S.C., where his father was a small homebuilder. “I dropped out of school when I was 19 to go into the business because I always had a passion for building,” he said.
When Mr. Ginn was in his 30s, he worked with the Butcher brothers, Jake and C. H. Jr., Tennessee bankers who went to prison for bank fraud. In 1986, the Federal Deposit Insurance Corporation sued Mr. Ginn, contending that he had participated in a scheme with the brothers to defraud banks under the pretense of developing a property in that state. Mr. Ginn said he settled with the F.D.I.C. in the early 1990s and paid $500,000, without admitting wrongdoing. An F.D.I.C spokesman said the agency did not have documents from that period detailed enough to confirm Mr. Ginn’s account.
In 1985, he bought several resort and residential developments on Hilton Head Island, including such landmarks as the golf course where the Heritage Classic was played. “I liked the resort business more than building condos and shopping centers,” Mr. Ginn said. “Selling fun is more enjoyable.”
But his Hilton Head project did not prove to be a good investment. Some critics argue that he took on too much debt. As his cash-flow problems grew, a local radio station carried bulletins announcing when Ginn employees could safely cash paychecks and bumper stickers began appearing that said: “Honk if Bobby Owes You.”
Mr. Ginn sold his Hilton Head assets in 1986 to pay off debts, and declared personal bankruptcy two years later.
He resuscitated his career by working for Rochester Community Savings Bank in New York as a consultant on its investment in Wild Dunes, a North Carolina resort.
He got a big break in 1997, when Lubert-Adler started investing in his projects. Over the next decade, the firm, whose investors include the endowments for Harvard and Princeton, pumped about $800 million into his properties. Their partnership was structured such that the private equity firm put up all the money and took 80 percent of the profits.
The timing of the relationship couldn’t have been better. “Their business really took off after Sept. 11, when people turned from financial investments to hard assets,” said Robert Gidel, a former president of the Ginn Companies.
Mr. Ginn’s development style was unusual: he didn’t build clubhouses or other services until a large number of lots were sold. “Typically, developers start with a hotel or amenities because skeptical buyers want to see things,” Mr. Gidel said. “But here the market was so strong, and people wanted to believe.”
Dan Gerner, who owned a home in Quail West, one of the few developed properties that Mr. Ginn bought, said Mr. Ginn’s lavish spending ornamented his operation with all the trappings of success. At Quail West, Mr. Gerner said, Mr. Ginn “spent $12 million remodeling the clubhouse, and when the members didn’t like it, he spent $4 million more changing it.”
Many buyers bought several properties and hoped to flip them for a profit.
Even Mr. Adler, the Lubert-Adler chief, was personally involved in at least one deal at Tesoro. According to property records, he bought a parcel in 2004 and quickly sold it for a $205,000 profit.
A partnership formed by Mr. Adler and Mr. Ginn, A & G, also bought and sold five properties at Bella Collina for a $2.5 million profit over a period of weeks.
Those transactions raised possible conflict-of-interest questions, experts in private equity say, because the partnership bought property in developments that were also assets held by private equity funds that Mr. Adler was helping to oversee. Steven N. Kaplan, a professor of finance at the University of Chicago, said that transactions such as this can be problematic because investors in a fund are deprived of profits that potentially accrue to insiders who buy assets for themselves.
Mr. Adler says that although he bought the single property at Tesoro in his own name, he had actually “made a loan to two individuals to purchase that property.” He said that they — not he — kept the profits from the transaction and that they repaid him with interest.
As for the five properties purchased by A & G, Mr. Adler said the situation was “rectified.”
“I transferred my investment back to Mr. Ginn and never participated or received a penny of profit,” he said. Mr. Ginn confirmed Mr. Adler’s account.
The A & G deals are cited in a class-action suit filed last week in federal district court in Florida, alleging a scheme to sell properties based on fraudulent appraisals. Although Mr. Adler and Mr. Ginn are cited in the case, their firms, and not they as individuals, are named as defendants. Mr. Adler said he was no longer a partner in A & G when the transactions took place and denied any wrongdoing. Mr. Ginn said he had not seen the suit but also denied allegations of wrongdoing.
In 2006, Mr. Ginn’s partnership with Lubert-Adler borrowed $675 million from Credit Suisse, out of which it took a distribution of $332 million. (Mr. Adler said that his firm put back roughly that amount after sales slowed.) The partnership used the balance of the Credit Suisse loan to finance four resorts.
But the next year, the real estate market began to enter a free fall, and by 2008 the partnership couldn’t make payments on the Credit Suisse loan. Tesoro and Quail West filed for bankruptcy, and Laurelmor was sold. “There were no buyers and no market,” Mr. Tobin said.
Mr. Ginn says he now faces about 30 lawsuits.
According to one filed in a Florida circuit court, buyers were required to turn over their power of attorney to Richard T. Davis, a partner in a law firm that represented several Ginn companies, in order to buy land in Tesoro. The suit alleges that Mr. Davis signed documents that never provided detailed disclosures about costs, as the government requires. Since Mr. Davis was the companies’ closing agent, the suit contends, he knew that the disclosures were incomplete.
“I assure you that we tried to disclose everything that was out there,” Mr. Ginn said. Mr. Davis’s lawyer said the allegations were without merit.
The Florida suit also alleges that Mr. Ginn worked to artificially inflate the prices of parcels in his development. In one case, according to the lawsuit, a buyer bought two properties for a total of $1.007 million, and Mr. Ginn’s title company recorded the respective sale prices as $1.007 million and $1. The company then used the larger price as a “comparable” figure in an appraisal for Roy Bridges, a British financial adviser who bought a property for $1.195 million, according to appraisal records. Mr. Bridges’s property is now in foreclosure.
Mr. Ginn contends that “the county recorded it incorrectly.”
According to a transcript of a video obtained by a law firm representing property owners in the suit, a Ginn salesman told a group of potential buyers at Bella Collina that “Lot 5 sold for $2.1 million this morning.” But property records showed that the parcel sold for just $416,900, according to the lawsuit.
Mr. Ginn said he was “shocked because the salesman deviated from company practices.”
MR. GINN’S partnership with Lubert-Adler still has three properties left to develop and owns some land at existing resorts. “At this point, we have invested more than we have distributed back to investors,” Mr. Adler said. “We got hit by the economic tsunami, and we did not anticipate how tough it would be.”
Mr. Ginn says he is “ready to sell properties in trophy locations” when the market turns around.
“If you can’t sell,” he said, “you die.”
It’s Tee Time. Where Is Everybody?
By GERALDINE FABRIKANT
Montverde, Fla.
OFF the turnpike here in central Florida, hidden behind stucco walls, sits a sprawling Tuscan-style clubhouse on a hill overlooking a string of lakes, a golf course and green fields.
This 1,900-acre property, called Bella Collina, was designed to hold 800 homes. Today, only 48 houses dot the landscape, and just three are occupied. The clubhouse, though open, is eerily quiet, and a promised swimming pool and equestrian center have yet to be built.
Bella Collina, the brainchild of Robert Edward Ginn III, looks like a ghost town. So does Tesoro, another resort opened by Mr. Ginn near Port St. Lucie, where just 150 houses sit on 900 lots. And the Conservatory in Palm Coast, also from Mr. Ginn, is even more barren: 335 out of 340 lots are empty.
As the real estate boom expanded in recent years, developers and home buyers believed that residential golf resorts were a sure-fire bet. Many buyers looked to buy properties that they could flip for a quick profit. Others were lured by stunning views, club services and security. While there is no reliable data on the growth in residential golf resorts, analysts say the market is well past its peak — particularly in the Sun Belt — and there is now an overabundance of developments.
“The aggressive building of new resort courses continued from the mid-1990s into the 2000s, contributing to an increasing glut of inventory that finally found no market,” said Joe Beditz, chief executive of the National Golf Foundation, a trade group that tracks data on the golf industry.
Mr. Ginn, 60, was able to cash in on the boom despite a spotty record that included some well-publicized failures on Hilton Head Island, S.C., in the 1980s. But when the real estate market began to tank in 2007, his empire came undone. “As property values plummeted, many investors had property worth less than their loans, and they were unprepared to pay their club and association fees,” says Toby Tobin, a Florida real estate agent.
Other golf resorts are also struggling. WCI Communities, which built resorts in Florida, Virginia and the Northeast, filed for bankruptcy in August. So did the Yellowstone Club in Big Sky, Mont., and three other resorts that, like some of Mr. Ginn’s, had loans arranged by Credit Suisse. Even the venerable Greenbrier Resort in West Virginia has sought bankruptcy protection.
For Mr. Ginn, a man who could sell 400 lots in a single day during the height of the real estate boom, it has been a huge comedown. While other developers may have built more golf resorts, few did so as grandly or as extravagantly. The tab for the 116,000- square-foot clubhouse at Tesoro reached $48 million.
“Most developers used consultants,” recalled Dean Adler, co-founder of Lubert-Adler Partners, a private equity firm in Philadelphia that invested in Mr. Ginn’s projects. “Bobby had a feel. He could be handed a topography map at a site and sketch out the entire resort.”
An amiable Southerner with a casual personal style, Mr. Ginn was a virtuoso at selling investors his vision of the luxe lifestyle.
“Bobby is very smooth and very likable,” said Hilton Wiener, a lawyer who bought an investment property at Tesoro. “He is a down-home guy who is not a pushy kind of salesperson.”
But when a new resort was in the works, Mr. Ginn knew how to generate a buying frenzy by holding lavish parties where potential buyers greatly outnumbered available lots, say agents and investors who attended the events.
“You would come to one of Ginn’s sales weekends and you would be drinking and thinking, ‘I hope I get chosen as one of the select few who gets to buy a lot,’ ” Mr. Wiener recalled. “The setting is very lush: hand-rolled cigars, fancy parties, vans with the Ginn name plastered on them.”
The high times ended when the market turned two years ago. Sales stalled, and Mr. Ginn had trouble paying off loans. Two of his properties, Tesoro and Quail West in Naples, Fla., filed for bankruptcy in December 2008 and were later sold for a fraction of what he had put into them. He sold Laurelmor, a resort in North Carolina, to another developer for $32 million. Mr. Ginn’s network of companies still owns the facilities at Bella Collina and the Conservatory.
Not all of Mr. Ginn’s 13 golf resorts are in such dire straits. But even at some of the most successful, like Reunion near Orlando, the Ginn Companies is considering programs to attract more buyers by offering fractional ownership at lower prices.
Mr. Ginn says his remaining properties will eventually pay off. “My belief is that when the depression ends, there will be a pent-up demand for happiness,” he said in an interview at his offices at the Hammock Beach Resort near Daytona Beach. “Sometime between 2035 or 2040, Florida will double in size.”
In the meantime, he faces dozens of lawsuits from angry investors alleging that his companies used deceptive and misleading trade practices in representing the demand for and value of his properties. “We will vigorously defend against these false allegations,” Mr. Ginn said.
BOBBY GINN grew up in Hampton, S.C., where his father was a small homebuilder. “I dropped out of school when I was 19 to go into the business because I always had a passion for building,” he said.
When Mr. Ginn was in his 30s, he worked with the Butcher brothers, Jake and C. H. Jr., Tennessee bankers who went to prison for bank fraud. In 1986, the Federal Deposit Insurance Corporation sued Mr. Ginn, contending that he had participated in a scheme with the brothers to defraud banks under the pretense of developing a property in that state. Mr. Ginn said he settled with the F.D.I.C. in the early 1990s and paid $500,000, without admitting wrongdoing. An F.D.I.C spokesman said the agency did not have documents from that period detailed enough to confirm Mr. Ginn’s account.
In 1985, he bought several resort and residential developments on Hilton Head Island, including such landmarks as the golf course where the Heritage Classic was played. “I liked the resort business more than building condos and shopping centers,” Mr. Ginn said. “Selling fun is more enjoyable.”
But his Hilton Head project did not prove to be a good investment. Some critics argue that he took on too much debt. As his cash-flow problems grew, a local radio station carried bulletins announcing when Ginn employees could safely cash paychecks and bumper stickers began appearing that said: “Honk if Bobby Owes You.”
Mr. Ginn sold his Hilton Head assets in 1986 to pay off debts, and declared personal bankruptcy two years later.
He resuscitated his career by working for Rochester Community Savings Bank in New York as a consultant on its investment in Wild Dunes, a North Carolina resort.
He got a big break in 1997, when Lubert-Adler started investing in his projects. Over the next decade, the firm, whose investors include the endowments for Harvard and Princeton, pumped about $800 million into his properties. Their partnership was structured such that the private equity firm put up all the money and took 80 percent of the profits.
The timing of the relationship couldn’t have been better. “Their business really took off after Sept. 11, when people turned from financial investments to hard assets,” said Robert Gidel, a former president of the Ginn Companies.
Mr. Ginn’s development style was unusual: he didn’t build clubhouses or other services until a large number of lots were sold. “Typically, developers start with a hotel or amenities because skeptical buyers want to see things,” Mr. Gidel said. “But here the market was so strong, and people wanted to believe.”
Dan Gerner, who owned a home in Quail West, one of the few developed properties that Mr. Ginn bought, said Mr. Ginn’s lavish spending ornamented his operation with all the trappings of success. At Quail West, Mr. Gerner said, Mr. Ginn “spent $12 million remodeling the clubhouse, and when the members didn’t like it, he spent $4 million more changing it.”
Many buyers bought several properties and hoped to flip them for a profit.
Even Mr. Adler, the Lubert-Adler chief, was personally involved in at least one deal at Tesoro. According to property records, he bought a parcel in 2004 and quickly sold it for a $205,000 profit.
A partnership formed by Mr. Adler and Mr. Ginn, A & G, also bought and sold five properties at Bella Collina for a $2.5 million profit over a period of weeks.
Those transactions raised possible conflict-of-interest questions, experts in private equity say, because the partnership bought property in developments that were also assets held by private equity funds that Mr. Adler was helping to oversee. Steven N. Kaplan, a professor of finance at the University of Chicago, said that transactions such as this can be problematic because investors in a fund are deprived of profits that potentially accrue to insiders who buy assets for themselves.
Mr. Adler says that although he bought the single property at Tesoro in his own name, he had actually “made a loan to two individuals to purchase that property.” He said that they — not he — kept the profits from the transaction and that they repaid him with interest.
As for the five properties purchased by A & G, Mr. Adler said the situation was “rectified.”
“I transferred my investment back to Mr. Ginn and never participated or received a penny of profit,” he said. Mr. Ginn confirmed Mr. Adler’s account.
The A & G deals are cited in a class-action suit filed last week in federal district court in Florida, alleging a scheme to sell properties based on fraudulent appraisals. Although Mr. Adler and Mr. Ginn are cited in the case, their firms, and not they as individuals, are named as defendants. Mr. Adler said he was no longer a partner in A & G when the transactions took place and denied any wrongdoing. Mr. Ginn said he had not seen the suit but also denied allegations of wrongdoing.
In 2006, Mr. Ginn’s partnership with Lubert-Adler borrowed $675 million from Credit Suisse, out of which it took a distribution of $332 million. (Mr. Adler said that his firm put back roughly that amount after sales slowed.) The partnership used the balance of the Credit Suisse loan to finance four resorts.
But the next year, the real estate market began to enter a free fall, and by 2008 the partnership couldn’t make payments on the Credit Suisse loan. Tesoro and Quail West filed for bankruptcy, and Laurelmor was sold. “There were no buyers and no market,” Mr. Tobin said.
Mr. Ginn says he now faces about 30 lawsuits.
According to one filed in a Florida circuit court, buyers were required to turn over their power of attorney to Richard T. Davis, a partner in a law firm that represented several Ginn companies, in order to buy land in Tesoro. The suit alleges that Mr. Davis signed documents that never provided detailed disclosures about costs, as the government requires. Since Mr. Davis was the companies’ closing agent, the suit contends, he knew that the disclosures were incomplete.
“I assure you that we tried to disclose everything that was out there,” Mr. Ginn said. Mr. Davis’s lawyer said the allegations were without merit.
The Florida suit also alleges that Mr. Ginn worked to artificially inflate the prices of parcels in his development. In one case, according to the lawsuit, a buyer bought two properties for a total of $1.007 million, and Mr. Ginn’s title company recorded the respective sale prices as $1.007 million and $1. The company then used the larger price as a “comparable” figure in an appraisal for Roy Bridges, a British financial adviser who bought a property for $1.195 million, according to appraisal records. Mr. Bridges’s property is now in foreclosure.
Mr. Ginn contends that “the county recorded it incorrectly.”
According to a transcript of a video obtained by a law firm representing property owners in the suit, a Ginn salesman told a group of potential buyers at Bella Collina that “Lot 5 sold for $2.1 million this morning.” But property records showed that the parcel sold for just $416,900, according to the lawsuit.
Mr. Ginn said he was “shocked because the salesman deviated from company practices.”
MR. GINN’S partnership with Lubert-Adler still has three properties left to develop and owns some land at existing resorts. “At this point, we have invested more than we have distributed back to investors,” Mr. Adler said. “We got hit by the economic tsunami, and we did not anticipate how tough it would be.”
Mr. Ginn says he is “ready to sell properties in trophy locations” when the market turns around.
“If you can’t sell,” he said, “you die.”
Friday, April 24, 2009
Sunday, April 12, 2009
Tesoro Bought Out Of Bankruptcy
Port St. Lucie's swanky Tesoro bought out of bankruptcy
By Eve Samples, Palm Beach Post
Tuesday, April 7, 2009
PORT ST. LUCIE — Tesoro, Port St. Lucie’s swankiest subdivision, has been bought out of bankruptcy.
The apparent white knight: Glenn Straub, the owner of Palm Beach Polo Golf & Country Club in Wellington.
One of Straub’s companies, West Coast Investors LLC, closed on the deal last week, paying $10.99 million for the development off Becker Road.
What he’s getting for the money: 353 lots, a golf course, 11 acres of commercial property, a racquet club and Tesoro’s crown jewel, a 115,000-square-foot clubhouse. A second golf course lease also is included in the deal.
On the surface, the price seems like a song — especially since quarter-acre lots in Tesoro once started at $250,000. But the sale comes with baggage. A biggie is the clubhouse, a $45 million facility that will cost big bucks to run.
“The issues that the club has are fairly profound,” said Don “Toby” Tobin, a Palm Coast-based real estate agent who has followed the ups and downs of Tesoro’s developer, Celebration-based Ginn Co. “They don’t have enough members, and they’ve got members who are not paying their dues.”
The Ginn affiliates behind Tesoro and another community in Naples, Quail West, defaulted last summer on $675 million in loans facilitated by Credit Suisse. In December, they filed a Chapter 7 bankruptcy petition in West Palm Beach.
Straub, one of Wellington’s largest landowners, closed on the Tesoro sale Tuesday. The golf club temporarily shut down as the new owners took over. Members were directed to play at nearby Martin Downs Country Club — where Straub bought the village center and two golf courses in early 2008.
By Eve Samples, Palm Beach Post
Tuesday, April 7, 2009
PORT ST. LUCIE — Tesoro, Port St. Lucie’s swankiest subdivision, has been bought out of bankruptcy.
The apparent white knight: Glenn Straub, the owner of Palm Beach Polo Golf & Country Club in Wellington.
One of Straub’s companies, West Coast Investors LLC, closed on the deal last week, paying $10.99 million for the development off Becker Road.
What he’s getting for the money: 353 lots, a golf course, 11 acres of commercial property, a racquet club and Tesoro’s crown jewel, a 115,000-square-foot clubhouse. A second golf course lease also is included in the deal.
On the surface, the price seems like a song — especially since quarter-acre lots in Tesoro once started at $250,000. But the sale comes with baggage. A biggie is the clubhouse, a $45 million facility that will cost big bucks to run.
“The issues that the club has are fairly profound,” said Don “Toby” Tobin, a Palm Coast-based real estate agent who has followed the ups and downs of Tesoro’s developer, Celebration-based Ginn Co. “They don’t have enough members, and they’ve got members who are not paying their dues.”
The Ginn affiliates behind Tesoro and another community in Naples, Quail West, defaulted last summer on $675 million in loans facilitated by Credit Suisse. In December, they filed a Chapter 7 bankruptcy petition in West Palm Beach.
Straub, one of Wellington’s largest landowners, closed on the Tesoro sale Tuesday. The golf club temporarily shut down as the new owners took over. Members were directed to play at nearby Martin Downs Country Club — where Straub bought the village center and two golf courses in early 2008.
Loan Modification: The Latest Scam
Florida’s Attorney General sues illegal mortgage modification company
Attorney General Bill McCollum filed a lawsuit against National Foreclosure Counseling Services, Corp. for charging up-front fees to customers seeking help modifying their mortgage. Florida legislators enacted the Foreclosure Rescue Fraud Prevention Act last October, forbidding any company from charging such a fee in Florida prior to services being rendered, other than by an attorney.
In response to the lawsuit, a judge has entered an order prohibiting NFCS, also known as American Foreclosure Counseling Center, from collecting any additional up-front money from clients.
Across the country, former mortgage brokers are now preying upon the same people they ripped off just a few years back. Back then, brokers were completing fraudulent loan applications and taking kickbacks (in the form of a yield spread premium) from lenders for charging home buyers higher interest rates than the rate for which they actually qualified.
Today, out-of-work brokers are now going back to these same people, promising they can renegotiate with the new owner of the home loan. Often, home owners pay an up-front fee of hundreds or even thousands of dollars, but in return, they often get nothing.
Keep in mind that, if you have been served with a foreclosure, you must respond to the complaint, regardless of whether you are working with your lender or not. Your lender will often use the “mortgage modification process” as a distraction to keep you from actively defending your foreclosure.
Any homeowner served with foreclosure papers should immediately seek the advice of a lawyer who focuses in the area of foreclosure defense. If you have been charged an up-front fee by National Foreclosure Counselling Services or any non-attorney "foreclosure rescue" firm, contact Florida’s fraud hotline at 1-866-966-7226.
Attorney General Bill McCollum filed a lawsuit against National Foreclosure Counseling Services, Corp. for charging up-front fees to customers seeking help modifying their mortgage. Florida legislators enacted the Foreclosure Rescue Fraud Prevention Act last October, forbidding any company from charging such a fee in Florida prior to services being rendered, other than by an attorney.
In response to the lawsuit, a judge has entered an order prohibiting NFCS, also known as American Foreclosure Counseling Center, from collecting any additional up-front money from clients.
Across the country, former mortgage brokers are now preying upon the same people they ripped off just a few years back. Back then, brokers were completing fraudulent loan applications and taking kickbacks (in the form of a yield spread premium) from lenders for charging home buyers higher interest rates than the rate for which they actually qualified.
Today, out-of-work brokers are now going back to these same people, promising they can renegotiate with the new owner of the home loan. Often, home owners pay an up-front fee of hundreds or even thousands of dollars, but in return, they often get nothing.
Keep in mind that, if you have been served with a foreclosure, you must respond to the complaint, regardless of whether you are working with your lender or not. Your lender will often use the “mortgage modification process” as a distraction to keep you from actively defending your foreclosure.
Any homeowner served with foreclosure papers should immediately seek the advice of a lawyer who focuses in the area of foreclosure defense. If you have been charged an up-front fee by National Foreclosure Counselling Services or any non-attorney "foreclosure rescue" firm, contact Florida’s fraud hotline at 1-866-966-7226.
Monday, April 6, 2009
Debt collectors and the lies they tell
By Cathy Moran on Apr 6, 2009 in Debt Collector Abuse, Family Debt Problems
Stories from clients lately are full of another round of inventive and utterly false statements about the law from the mouths of debt collectors. These lies are effective because the hearer doesn’t understand either the law or the economics of debt collecting.
Some of the most often repeated lies are:
This debt is not dischargeable in bankruptcy
I can continue to call you until you give me the bankruptcy number
We’ll foreclose our HELOC regardless of senior debt or property value
Debt collectors realize that most consumers don’t understand how little legal leverage a debt collector has until they get a judgment. The consumer’s ignorance allows the debt collector to speak authoritatively without fear of contradiction. And there seem to be little constraint on their willingness to say anything that works.
The tools of the debt collector are fear, harrassment, and shame. They seek to use one emotion or the other to get the debtor to write them a check for money that they can’t get quickly or cheaply any other way.
Understand the game. Don’t get your legal advice from the debt collector.
Stories from clients lately are full of another round of inventive and utterly false statements about the law from the mouths of debt collectors. These lies are effective because the hearer doesn’t understand either the law or the economics of debt collecting.
Some of the most often repeated lies are:
This debt is not dischargeable in bankruptcy
I can continue to call you until you give me the bankruptcy number
We’ll foreclose our HELOC regardless of senior debt or property value
Debt collectors realize that most consumers don’t understand how little legal leverage a debt collector has until they get a judgment. The consumer’s ignorance allows the debt collector to speak authoritatively without fear of contradiction. And there seem to be little constraint on their willingness to say anything that works.
The tools of the debt collector are fear, harrassment, and shame. They seek to use one emotion or the other to get the debtor to write them a check for money that they can’t get quickly or cheaply any other way.
Understand the game. Don’t get your legal advice from the debt collector.
Tuesday, March 31, 2009
Fraudulent Loans: Throwing Foreclosures Out Of Court
Iris Martin, writing in the Huffington Post on Monday set forth her claim that a huge percentage of securitized mortgages are fraudulent and asserted that many foreclosures are already being thrown out of court based on the poor or non-existent titles of those of those who are bringing the foreclosure action.
Lack of perfection of title is just one reason that Martin feels that thousands of homes may actually already belong free and clear to homeowners who are just not yet aware of their legal situation and that thousands of others that have already been foreclosed may become the focus of lawsuits once the former owners realize what has happened to them. She claims that not only will President Obama's plan to create public-private partnerships to purchase and manage toxic assets not work, but it will be the final blow to the global economy.
The imperfect title problem came about, she says, because transfers and endorsements of notes were not properly made or not made at all and the real owner of a note may be impossible to identify.
Martin is promoting a new book to be published in June promoting her thesis so her theory needs to be taken with more than one grain of salt but, during the early 1990's real-estate-led banking crisis there were significant problems with mortgages that had been either bought or sold by failed banks where assignments had not been properly recorded and ownership was problematic. One investor who had purchased a portfolio of FDIC loans blithely carried out a foreclosure in FDIC's name because he had failed to record and then lost his assignment. He was mightily offended that FDIC refused to sign documents making the farce legal. These unperfected liens not only popped up when foreclosures were initiated but also when homeowners who had paid off their mortgages sort of thought they would like a discharge.
That these problems were created long before mortgages were sliced and diced into derivatives and that banks seem to be having a heck of a time unwinding these securities gives some credence to Martin's claims. It has seemed odd from the start that lenders were telling both Congressional hearings and television interviewers that it was extremely difficult to modify a loan because so many investors were involved. Could it be that they simply didn't know who the investor were?
Martin references numerous cases nationwide where judges threw out foreclosures where lenders had brought action against "illegally securitized loans and are no longer current holders of the notes."
Martin sees another problem where homeowners have a defense against foreclosure or avenues for redress when they have already lost their homes. These cases would be based on the more familiar type of mortgage fraud, predatory lending. She quotes one litigator from California who states that predatory lending claims, which can not only free the homeowner from the mortgage but result in substantial damages, can be won if the homeowner can provide that the loan was made purely for the lender's sole benefit.
A Wisconsin couple recently won such a case charging fraudulent misrepresentation and predatory practices. Now their attorney is fighting his way through the courts to convert the suit to class action status.
Ms. Martin maintains that there is not enough money in the world - or even from the government - to save lenders from their eventual fate as homeowners sue en masse to remove lenders from the titles to their homes.
Ms. Martin's book, which appears to be a do-it-yourself manual for homeowners to fight their mortgagees, will certainly attract wide attention even months before its publication. If she is right, the outcome is too terrible to contemplate. Even if she is wrong, her book may push enough people toward litigating their fate to become a self-fulfilling prophecy.
Lack of perfection of title is just one reason that Martin feels that thousands of homes may actually already belong free and clear to homeowners who are just not yet aware of their legal situation and that thousands of others that have already been foreclosed may become the focus of lawsuits once the former owners realize what has happened to them. She claims that not only will President Obama's plan to create public-private partnerships to purchase and manage toxic assets not work, but it will be the final blow to the global economy.
The imperfect title problem came about, she says, because transfers and endorsements of notes were not properly made or not made at all and the real owner of a note may be impossible to identify.
Martin is promoting a new book to be published in June promoting her thesis so her theory needs to be taken with more than one grain of salt but, during the early 1990's real-estate-led banking crisis there were significant problems with mortgages that had been either bought or sold by failed banks where assignments had not been properly recorded and ownership was problematic. One investor who had purchased a portfolio of FDIC loans blithely carried out a foreclosure in FDIC's name because he had failed to record and then lost his assignment. He was mightily offended that FDIC refused to sign documents making the farce legal. These unperfected liens not only popped up when foreclosures were initiated but also when homeowners who had paid off their mortgages sort of thought they would like a discharge.
That these problems were created long before mortgages were sliced and diced into derivatives and that banks seem to be having a heck of a time unwinding these securities gives some credence to Martin's claims. It has seemed odd from the start that lenders were telling both Congressional hearings and television interviewers that it was extremely difficult to modify a loan because so many investors were involved. Could it be that they simply didn't know who the investor were?
Martin references numerous cases nationwide where judges threw out foreclosures where lenders had brought action against "illegally securitized loans and are no longer current holders of the notes."
Martin sees another problem where homeowners have a defense against foreclosure or avenues for redress when they have already lost their homes. These cases would be based on the more familiar type of mortgage fraud, predatory lending. She quotes one litigator from California who states that predatory lending claims, which can not only free the homeowner from the mortgage but result in substantial damages, can be won if the homeowner can provide that the loan was made purely for the lender's sole benefit.
A Wisconsin couple recently won such a case charging fraudulent misrepresentation and predatory practices. Now their attorney is fighting his way through the courts to convert the suit to class action status.
Ms. Martin maintains that there is not enough money in the world - or even from the government - to save lenders from their eventual fate as homeowners sue en masse to remove lenders from the titles to their homes.
Ms. Martin's book, which appears to be a do-it-yourself manual for homeowners to fight their mortgagees, will certainly attract wide attention even months before its publication. If she is right, the outcome is too terrible to contemplate. Even if she is wrong, her book may push enough people toward litigating their fate to become a self-fulfilling prophecy.
Friday, March 27, 2009
Tesoro Club Bankruptcy Claim
Along with other proud members of The Tesoro Club, I am a creditor in the Tesoro Club Chapter 7 bankruptcy which has been filed in Southern District of Florida and designated Case Number 08-29772.
Reminder: The Proof Of Claim must be filed by you to be received by the bankruptcy clerk's office no later than April 30, 2009.
Owners are asking one another what to do with the form, whether to file it and, if so, how much to include. As always, I must give the following disclaimer: This is not to be construed as legal advice. See your own attorney. I can only share my thoughts as a fellow owner.
Notwithstanding the stream of harrassing correspondence eminating from the so-called "Director of Operations" of the club, my personal feeling is that the Ginn cartel owes us the money, not the other way around.
Mr. Congdon is correct that a Chapter 7 filing does not, in and of itself, absolve one of the requirement to pay a proper obligation to the bankrupt company. But this presupposes that there is a rightful contractual obligation to do so. Apparently the Trustee has not yet been made aware of the facts in this case. It's the usual "boilerplate" advice.
For the past year, I have been trying to get my money back from the Club for its breach of contract for its failure to fulfill its obligations. More about this later.
Don't succumb to these scare tactics. Again, (now I'm wearing a belt and suspenders) that is my position, not legal advice.
Reminder: The Proof Of Claim must be filed by you to be received by the bankruptcy clerk's office no later than April 30, 2009.
Owners are asking one another what to do with the form, whether to file it and, if so, how much to include. As always, I must give the following disclaimer: This is not to be construed as legal advice. See your own attorney. I can only share my thoughts as a fellow owner.
Notwithstanding the stream of harrassing correspondence eminating from the so-called "Director of Operations" of the club, my personal feeling is that the Ginn cartel owes us the money, not the other way around.
Mr. Congdon is correct that a Chapter 7 filing does not, in and of itself, absolve one of the requirement to pay a proper obligation to the bankrupt company. But this presupposes that there is a rightful contractual obligation to do so. Apparently the Trustee has not yet been made aware of the facts in this case. It's the usual "boilerplate" advice.
For the past year, I have been trying to get my money back from the Club for its breach of contract for its failure to fulfill its obligations. More about this later.
Don't succumb to these scare tactics. Again, (now I'm wearing a belt and suspenders) that is my position, not legal advice.
Friday, March 20, 2009
Anything Left Of Ginn Besides Its Lawsuits?
I assume many of you received the following communication, which I received today as a proud owner at Reunion. Apparently Lubert Adler has finally seen fit to take away the day to day running of the Reunion and Hammock Beach resorts from Ginn. This can only be seen as positive news. Reunion and Hammock are the only of the Ginn resorts which, in the hands of a capable hotel operator, actually stand a chance - in the foreseeable future - of being real first class golf communities.
As everyone knows, Ginn has already closed down its entire sales operation. Tesoro, Quail West, Ginn Sur Mer and Laurelmor are either in bankruptcy or Ginn has essentially been forced out. Reunion and Hammock Beach were the only viable communities - but not so long as they were being operated by Bobby Ginn and his cronies.
The mystery to me is why Lubert Adler ever allowed Bobby to run the resort instead of getting a flag, a known hotelier, such as a Four Seasons, Ritz, etc. Ginn is a salesman and a marketer. He seemed about as capable at running a hotel as performing brain surgery.
Dear Club Members:
In my last communication, I noted we were working diligently in restructuring costs and working to improve processes to assure the high standards of service and ongoing value of your membership in Ginn Clubs & Resorts.
Included was reference to the ongoing search for additional support and investment to realize the dream and vision of Bobby Ginn for a new standard of resort community, one that maximized the quality of lifestyle and recreation for family and friends for years to come.
While that search continues; effective April 6, day-to-day operations management for Hammock Beach Resort and Reunion Resort will be transitioned to Noble Investment Group, a leading hospitality management company based in Atlanta, Georgia, and Reynolds Signature Communities, Greensboro, Georgia.
Noble Investment Group is a leading sponsor of private equity real estate funds and an integrated operating and development organization that specializes in making value-added investments in hotels and resorts throughout North America. An award winning operator of more than 8,000 hotel and resort guest rooms, convention and conference centers with approximately 1 million sq. ft. of meeting space, as well as day and resort spas, upscale restaurants and branded retail coffee stores.
Headquartered in Lake Oconee, Georgia (between Atlanta and Augusta), Reynolds Signature Communities was formed in 1985 by Mercer Reynolds and Jamie Reynolds to develop Reynolds Plantation and the surrounding lake area. Reynolds Plantation is an award-winning golf and lake community that has grown to feature 99 holes of championship golf and 80 miles of shoreline, as well as a AAA 5-diamond Ritz-Carlton Lodge.
While Ownership of the resorts remains the same, the broad expanse of resources and experience of these operators will allow even greater flexibility and availability of value-driven operations strategies, while at the same time continuing the high quality and standards establish by Ginn Clubs & Resorts, and especially the staff and management of these fine resorts.
There are no immediate changes planned for membership structure or rental operations with this change as both parties become more familiar with the projects and of course the valued input from you our Owners and Members.
The change is to be effective early April and additional communications and meetings will be scheduled in the next several weeks in an effort to answer the many questions you may have.
We hope you will remain patient through the initial transition and know we will make every effort to communicate directly through this process.
Steve Grainger
Senior Vice President, Chief Operating Officer
Ginn Clubs & Resorts
As everyone knows, Ginn has already closed down its entire sales operation. Tesoro, Quail West, Ginn Sur Mer and Laurelmor are either in bankruptcy or Ginn has essentially been forced out. Reunion and Hammock Beach were the only viable communities - but not so long as they were being operated by Bobby Ginn and his cronies.
The mystery to me is why Lubert Adler ever allowed Bobby to run the resort instead of getting a flag, a known hotelier, such as a Four Seasons, Ritz, etc. Ginn is a salesman and a marketer. He seemed about as capable at running a hotel as performing brain surgery.
Dear Club Members:
In my last communication, I noted we were working diligently in restructuring costs and working to improve processes to assure the high standards of service and ongoing value of your membership in Ginn Clubs & Resorts.
Included was reference to the ongoing search for additional support and investment to realize the dream and vision of Bobby Ginn for a new standard of resort community, one that maximized the quality of lifestyle and recreation for family and friends for years to come.
While that search continues; effective April 6, day-to-day operations management for Hammock Beach Resort and Reunion Resort will be transitioned to Noble Investment Group, a leading hospitality management company based in Atlanta, Georgia, and Reynolds Signature Communities, Greensboro, Georgia.
Noble Investment Group is a leading sponsor of private equity real estate funds and an integrated operating and development organization that specializes in making value-added investments in hotels and resorts throughout North America. An award winning operator of more than 8,000 hotel and resort guest rooms, convention and conference centers with approximately 1 million sq. ft. of meeting space, as well as day and resort spas, upscale restaurants and branded retail coffee stores.
Headquartered in Lake Oconee, Georgia (between Atlanta and Augusta), Reynolds Signature Communities was formed in 1985 by Mercer Reynolds and Jamie Reynolds to develop Reynolds Plantation and the surrounding lake area. Reynolds Plantation is an award-winning golf and lake community that has grown to feature 99 holes of championship golf and 80 miles of shoreline, as well as a AAA 5-diamond Ritz-Carlton Lodge.
While Ownership of the resorts remains the same, the broad expanse of resources and experience of these operators will allow even greater flexibility and availability of value-driven operations strategies, while at the same time continuing the high quality and standards establish by Ginn Clubs & Resorts, and especially the staff and management of these fine resorts.
There are no immediate changes planned for membership structure or rental operations with this change as both parties become more familiar with the projects and of course the valued input from you our Owners and Members.
The change is to be effective early April and additional communications and meetings will be scheduled in the next several weeks in an effort to answer the many questions you may have.
We hope you will remain patient through the initial transition and know we will make every effort to communicate directly through this process.
Steve Grainger
Senior Vice President, Chief Operating Officer
Ginn Clubs & Resorts
Monday, March 16, 2009
New York Times: Thoughts On Walking Away
March 14, 2009
Thoughts on Walking Away From Your Home Loan
If you’re among the millions of people who will not qualify for the Obama administration’s program to help troubled homeowners, you’re probably wondering what you’re supposed to do now.
Perhaps you no longer have enough income to pay your loans. Or you can afford the payments but don’t qualify for refinancing under the new plan because the value of your home is too far below the balance of the loan. If you’re far enough underwater, you’re probably questioning the wisdom of writing a monthly check on a place that may take 10 or 15 years to get back to the value it had two or three years ago. It isn’t easy to come up with the answer, and if you have moral misgivings about not making good on your mortgage, a religious officiant may offer as much useful guidance as a financial planner.
In an economic environment like this one, however, the consequences of giving up on your mortgage may not be as painful as they were a few years ago. Yes, it’s almost always preferable to negotiate a better deal on your existing mortgage than to walk away. But if you can’t work things out with your lender, you probably won’t be sued. You shouldn’t receive a major tax bill either. And the damage to your credit will not be permanent or insurmountable.
Let’s look at these last three in order.
YOUR LENDER First off, let’s define what we mean by “giving up” on your current mortgage. It may mean trying for a short sale, where the lender allows you to sell your home for less than the mortgage amount. You may also hand over the deed to the home in exchange for the lender agreeing not to start foreclosure proceedings (a “deed in lieu” in industry terms). Then, there’s foreclosure itself, and the possibility that bankruptcy judges may soon have the power to adjust the terms of primary mortgages.
That said, just because you’re ineligible under the Obama plan doesn’t mean that your lender or servicer won’t ultimately adjust your mortgage anyhow. Collectively, there are enough people in trouble or under water on their loans that they have plenty of leverage if they’re willing to play chicken with their lender and threaten to stop paying.
The problem is, the lender can play chicken, too, by threatening to come after you for the balance of any money you owe — whether it’s the difference between what you sell the property for yourself and the remaining mortgage, or the loan amount left over after the lender sells your property in foreclosure.
The lender may not follow through, though. “What our membership is telling us is that it can be cost-prohibitive to chase down a borrower who is already in financial distress,” said John Mechem, a spokesman for the Mortgage Bankers Association. “You can’t squeeze blood from a stone.” They may, however, still come after people with high incomes who walk away from jumbo loans that are way under water or loans on investment properties.
In fact, if you want to be sure your lender (or a collection agency that it may sell your loan to) won’t chase you down, it’s a good idea to have a lawyer involved with any short sale, deed in lieu or foreclosure itself. “You must get the bank to agree in writing that any deficiency is waived,” said Chip Parker, a lawyer specializing in foreclosure with Parker & DuFresne in Jacksonville, Fla.
The biggest challenge here may simply be finding someone at the bank to help. Having a second mortgage will also complicate matters.
YOUR TAXES You also need to consider the taxman. Often, forgiven debts are taxable as income. Recent legislative changes, however, eliminate the federal tax burden through 2012 on most primary residence debt that a lender has reduced through loan restructuring or forgiven during foreclosure.
Mark Luscombe, principal analyst for CCH, a tax information service, said that people who sell their home through a short sale or give up the deed in lieu of foreclosure can also qualify for tax relief if they use a special tax form, 1099-C, that reflects the amount of debt that the lender has forgiven.
YOUR CREDIT A short sale, deed in lieu or foreclosure itself will almost certainly damage your credit report and score, and the black mark will last for up to seven years. But the amount of damage it does will depend on how much other credit trouble you’ve gotten yourself into with other lenders.
If you’re giving up the home you own, you’ll probably need to rent soon afterward. Will landlords turn you away once they check your credit and discover your troubled mortgage? “If it’s the only thing marring their credit, it’s probably not a big issue,” said Clay Powell, the director of the Rental Property Owners Association of Michigan, who added that good tenants could be scarce in economic environments like this one.
In fact, Todd J. Zywicki, a law professor at George Mason University, predicted that FICO may have to adjust its credit scores to lessen the impact of a foreclosure or similar incident. “It just seems obvious that a foreclosure in 2008 or 2009 doesn’t have as much information value as a foreclosure five years ago,” he said. “To the extent that foreclosure doesn’t predict future behavior as much as it did in the past, you’d expect that the FICO algorithm would change to adjust for that.”
Craig Watts, a spokesman for FICO, said that was an interesting idea. “We try not to get involved too much in psychobabble around what is and isn’t predictive,” he said. “If the numbers show that foreclosure is less predictive, then we’ll take it into account in future redevelopments of the formula.” That would take a minimum of two to three years, though.
Some lenders aren’t waiting that long to initiate their own foreclosure destigmatization programs. The Golden 1, one of the nation’s largest credit unions, now has a mortgage repair loan for people who have lost a home to foreclosure but want to buy a new one.
It’s hard to imagine that there won’t be a parade of insurance companies, credit card issuers and mortgage lenders in Golden 1’s wake, even though Fannie Mae and Freddie Mac may be unwilling to guarantee the mortgages of such borrowers for several years. In fact, Aaron Bresko, the vice president of lending for BECU, another large credit union based in Washington State, is putting together a panel called “How to Lend to the Newly Credit Impaired” for a conference later this year.
“Good people have bad things happen to them, so how do you find those people and reach out to them?” he said. “As the year progresses, it’s going to be an emerging market.”
Thoughts on Walking Away From Your Home Loan
If you’re among the millions of people who will not qualify for the Obama administration’s program to help troubled homeowners, you’re probably wondering what you’re supposed to do now.
Perhaps you no longer have enough income to pay your loans. Or you can afford the payments but don’t qualify for refinancing under the new plan because the value of your home is too far below the balance of the loan. If you’re far enough underwater, you’re probably questioning the wisdom of writing a monthly check on a place that may take 10 or 15 years to get back to the value it had two or three years ago. It isn’t easy to come up with the answer, and if you have moral misgivings about not making good on your mortgage, a religious officiant may offer as much useful guidance as a financial planner.
In an economic environment like this one, however, the consequences of giving up on your mortgage may not be as painful as they were a few years ago. Yes, it’s almost always preferable to negotiate a better deal on your existing mortgage than to walk away. But if you can’t work things out with your lender, you probably won’t be sued. You shouldn’t receive a major tax bill either. And the damage to your credit will not be permanent or insurmountable.
Let’s look at these last three in order.
YOUR LENDER First off, let’s define what we mean by “giving up” on your current mortgage. It may mean trying for a short sale, where the lender allows you to sell your home for less than the mortgage amount. You may also hand over the deed to the home in exchange for the lender agreeing not to start foreclosure proceedings (a “deed in lieu” in industry terms). Then, there’s foreclosure itself, and the possibility that bankruptcy judges may soon have the power to adjust the terms of primary mortgages.
That said, just because you’re ineligible under the Obama plan doesn’t mean that your lender or servicer won’t ultimately adjust your mortgage anyhow. Collectively, there are enough people in trouble or under water on their loans that they have plenty of leverage if they’re willing to play chicken with their lender and threaten to stop paying.
The problem is, the lender can play chicken, too, by threatening to come after you for the balance of any money you owe — whether it’s the difference between what you sell the property for yourself and the remaining mortgage, or the loan amount left over after the lender sells your property in foreclosure.
The lender may not follow through, though. “What our membership is telling us is that it can be cost-prohibitive to chase down a borrower who is already in financial distress,” said John Mechem, a spokesman for the Mortgage Bankers Association. “You can’t squeeze blood from a stone.” They may, however, still come after people with high incomes who walk away from jumbo loans that are way under water or loans on investment properties.
In fact, if you want to be sure your lender (or a collection agency that it may sell your loan to) won’t chase you down, it’s a good idea to have a lawyer involved with any short sale, deed in lieu or foreclosure itself. “You must get the bank to agree in writing that any deficiency is waived,” said Chip Parker, a lawyer specializing in foreclosure with Parker & DuFresne in Jacksonville, Fla.
The biggest challenge here may simply be finding someone at the bank to help. Having a second mortgage will also complicate matters.
YOUR TAXES You also need to consider the taxman. Often, forgiven debts are taxable as income. Recent legislative changes, however, eliminate the federal tax burden through 2012 on most primary residence debt that a lender has reduced through loan restructuring or forgiven during foreclosure.
Mark Luscombe, principal analyst for CCH, a tax information service, said that people who sell their home through a short sale or give up the deed in lieu of foreclosure can also qualify for tax relief if they use a special tax form, 1099-C, that reflects the amount of debt that the lender has forgiven.
YOUR CREDIT A short sale, deed in lieu or foreclosure itself will almost certainly damage your credit report and score, and the black mark will last for up to seven years. But the amount of damage it does will depend on how much other credit trouble you’ve gotten yourself into with other lenders.
If you’re giving up the home you own, you’ll probably need to rent soon afterward. Will landlords turn you away once they check your credit and discover your troubled mortgage? “If it’s the only thing marring their credit, it’s probably not a big issue,” said Clay Powell, the director of the Rental Property Owners Association of Michigan, who added that good tenants could be scarce in economic environments like this one.
In fact, Todd J. Zywicki, a law professor at George Mason University, predicted that FICO may have to adjust its credit scores to lessen the impact of a foreclosure or similar incident. “It just seems obvious that a foreclosure in 2008 or 2009 doesn’t have as much information value as a foreclosure five years ago,” he said. “To the extent that foreclosure doesn’t predict future behavior as much as it did in the past, you’d expect that the FICO algorithm would change to adjust for that.”
Craig Watts, a spokesman for FICO, said that was an interesting idea. “We try not to get involved too much in psychobabble around what is and isn’t predictive,” he said. “If the numbers show that foreclosure is less predictive, then we’ll take it into account in future redevelopments of the formula.” That would take a minimum of two to three years, though.
Some lenders aren’t waiting that long to initiate their own foreclosure destigmatization programs. The Golden 1, one of the nation’s largest credit unions, now has a mortgage repair loan for people who have lost a home to foreclosure but want to buy a new one.
It’s hard to imagine that there won’t be a parade of insurance companies, credit card issuers and mortgage lenders in Golden 1’s wake, even though Fannie Mae and Freddie Mac may be unwilling to guarantee the mortgages of such borrowers for several years. In fact, Aaron Bresko, the vice president of lending for BECU, another large credit union based in Washington State, is putting together a panel called “How to Lend to the Newly Credit Impaired” for a conference later this year.
“Good people have bad things happen to them, so how do you find those people and reach out to them?” he said. “As the year progresses, it’s going to be an emerging market.”
Sunday, March 8, 2009
Judges Are Starting to Get Tough On Foreclosure Mills
Sarasota Florida Judge Berlin Slams The Foreclosure Door On Wamu!
In Sarasota, Florida, Judge Donna Pader Berlin slammed the foreclosure door on Washington Mutual Bank in a mortgage foreclosure case. I love reading about cases like this, because Judge Pader Berlin apparently has an understanding of what's really going on. She was able to see the mortgage company’s game, and she put them on the defensive.
On March 6, 2009, Judge Pader Berlin issued an Order Canceling Foreclosure Sale and Enjoining Plaintiff From Applying for Sale Date. In this case, it seems that the Plaintiff, WAMU, and the Defendant (who I shall not name to respect privacy) were in conversations to modify the mortgage. At the same time, the attorneys representing WAMU were moving the case forward through the court system. Unfortunately, these practices are routine nowadays.
The attorney representing WAMU was the Florida Default Law Group, one of the huge foreclosure mills in the State of Florida. They pursue thousands of foreclosures each month and their attorneys walk the courthouses pulling literally trunks filled with foreclosure documents. The Judge entered an Order on February 6, 2009 setting aside a final judgment of foreclosure because of excusable neglect. It seems that the defendant didn’t take actions in the Court to defend herself because of the ongoing mortgage modification negotiations. Although the foreclosure judgment was set aside, the Florida Default Law Group nevertheless requested and received a sale date of March 30, 2009. Bear in mind that there was no final judgment at this point.
In the Order dated March 6, 2009, the Judge enjoined the plaintiff, WAMU, from applying for another sale date until they receive a final judgment from the Court. If WAMU chooses to violate the March 6, 2009 Order, the Judge may impose sanctions. I wonder how the attorney from Florida Default Law Group explained that one to WAMU.
In Sarasota, Florida, Judge Donna Pader Berlin slammed the foreclosure door on Washington Mutual Bank in a mortgage foreclosure case. I love reading about cases like this, because Judge Pader Berlin apparently has an understanding of what's really going on. She was able to see the mortgage company’s game, and she put them on the defensive.
On March 6, 2009, Judge Pader Berlin issued an Order Canceling Foreclosure Sale and Enjoining Plaintiff From Applying for Sale Date. In this case, it seems that the Plaintiff, WAMU, and the Defendant (who I shall not name to respect privacy) were in conversations to modify the mortgage. At the same time, the attorneys representing WAMU were moving the case forward through the court system. Unfortunately, these practices are routine nowadays.
The attorney representing WAMU was the Florida Default Law Group, one of the huge foreclosure mills in the State of Florida. They pursue thousands of foreclosures each month and their attorneys walk the courthouses pulling literally trunks filled with foreclosure documents. The Judge entered an Order on February 6, 2009 setting aside a final judgment of foreclosure because of excusable neglect. It seems that the defendant didn’t take actions in the Court to defend herself because of the ongoing mortgage modification negotiations. Although the foreclosure judgment was set aside, the Florida Default Law Group nevertheless requested and received a sale date of March 30, 2009. Bear in mind that there was no final judgment at this point.
In the Order dated March 6, 2009, the Judge enjoined the plaintiff, WAMU, from applying for another sale date until they receive a final judgment from the Court. If WAMU chooses to violate the March 6, 2009 Order, the Judge may impose sanctions. I wonder how the attorney from Florida Default Law Group explained that one to WAMU.
Saturday, February 14, 2009
Short Sales For Desperate Owners
I posted my feelings on short sales back in October and, as expected, was chastised by some realtors that didn't know what they were talking about. (But I guess they need to make a living too.) There is nothing wrong with listing your property for short sale - and, if it works, it will (or may) offer a solution. It's just that it is usually a waste of time and effort.
I usually see the following:
1. Owner has an outstanding loan of, let's say, $400,000 and is listing his property for $200,000. I hear the complaint that he has not had a single offer in over a year.
BUT, that's NOT the problem. If owner did in fact get a full price offer for the $200,000 as listed, would the bank take it? I suspect the answer is NO. Without knowing the answer, why would you even bother?
If your realtor has nothing better to do, sure, it's no problem for you. And a realtor that understands short satles does (or should) know better.
2. If and when you do receive a short sale offer, you have to then submit a package to the loss mitigation department of the bank. This consists of a hardship letter, last two years tax returns, W-2s and a financial statement.
If you are not willing to provide these documents, don't even go through the exercise.
Secondly, if your financials show lots of income or assets (even in retirement accounts) you will absolutely NOT be approved. The bank will take the position that you can pay off the loan.
Again, this does not mean that you should NOT list your property for short sale. It only means that you are deluding yourself if you think that you are actually accomplishing anything by doing so. Other than making you feel good, usually you are not.
Unfortunately, it's back to square one: The only choices are whether to continue to pay or not.
If you do, prepare on doing it for a long time. If not, make sure you protect yourself and know what you are doing.
I usually see the following:
1. Owner has an outstanding loan of, let's say, $400,000 and is listing his property for $200,000. I hear the complaint that he has not had a single offer in over a year.
BUT, that's NOT the problem. If owner did in fact get a full price offer for the $200,000 as listed, would the bank take it? I suspect the answer is NO. Without knowing the answer, why would you even bother?
If your realtor has nothing better to do, sure, it's no problem for you. And a realtor that understands short satles does (or should) know better.
2. If and when you do receive a short sale offer, you have to then submit a package to the loss mitigation department of the bank. This consists of a hardship letter, last two years tax returns, W-2s and a financial statement.
If you are not willing to provide these documents, don't even go through the exercise.
Secondly, if your financials show lots of income or assets (even in retirement accounts) you will absolutely NOT be approved. The bank will take the position that you can pay off the loan.
Again, this does not mean that you should NOT list your property for short sale. It only means that you are deluding yourself if you think that you are actually accomplishing anything by doing so. Other than making you feel good, usually you are not.
Unfortunately, it's back to square one: The only choices are whether to continue to pay or not.
If you do, prepare on doing it for a long time. If not, make sure you protect yourself and know what you are doing.
Sunday, February 1, 2009
Read My Lips Fellow Investors: "It's What Is Known As Survival"
I feel like a broken record. I cannot be so presumptuous as to think that I can tell you what to do. But, friends, wake up and smell the coffee. As Ginn CEO Robert Gidel says, when explaining Ginn's decision to abandon its own contracts: "We're talking survival."
But, I'm not referring to the Ginn organization - I mean you and me!
Ginn lawsuit could be first of many for PGA Tour
— Marty Henwood @ 12:45 pm
FAIRWAYS MAGAZINE
February 1, 2009
Anyone caught by surprise with the news that PGA Tour is suing Ginn Resorts for breach of contact hasn’t been paying attention.
Get used to it. In the coming months, the PGA Tour lawyers could be spending an awful lot of time in court.
Prior to this week’s bombshell that Ginn was yanking all golf sponsorship immediately, there had been hope there would be enough in the kitty to cover this year’s Ginn Championship, a Champions Tour event to be held in the first week of April. Turns out that was nothing more than wishful thinking.
That sound you hear is the cash register slamming shut.
Just as you can’t fault the PGA Tour for dropping a lawsuit in their lap, it’s tough to point the finger at Ginn for rolling the dice and trying to get out of their agreement early. It’s what is known as survival.
One need look no further than this past weekend’s FBR Open to see just how close the tour is getting to the ledge when it comes to sponsors bailing out. Although official numbers are not available as of yet, attendance in Scottsdale was expected to have plummeted compared to recent years. Around the 18th green, there was far too much empty space where, at one time, hospitality tents once stood.
Of course, the PGA Tour is not the only sports entity feeling this current sledgehammer blow delivered by the economy. Far from it.
First, U.S. Bank announces they will not renewing for the Milwaukee event. Then Ginn drops their bad news on both the Champions and LPGA tours. And in Arizona, one of the PGA Tour’s most popular events showed signs of the tanking economy.
To top it off, the PGA Merchandise Show in Orlando, the biggest event of the year on the North American golf retail calendar, saw a significant drop in attendance – some forecasters predicted a downturn at the turnstiles as high seven percent.
Like everything else these days, in business, it’s all about keeping your head above water until the economy takes a turn for the better. Right now, that day looks a long way away.
Shelling out millions for a golf tournament is an expense that many can no longer afford.
It’s a sign-of-the-times reality check.
“We did the best we could, but the economy got the best of us,” Ginn CEO Robert Gidel said this week.
The betting line is they won’t be the last to sing that tune in the near future.
But, I'm not referring to the Ginn organization - I mean you and me!
Ginn lawsuit could be first of many for PGA Tour
— Marty Henwood @ 12:45 pm
FAIRWAYS MAGAZINE
February 1, 2009
Anyone caught by surprise with the news that PGA Tour is suing Ginn Resorts for breach of contact hasn’t been paying attention.
Get used to it. In the coming months, the PGA Tour lawyers could be spending an awful lot of time in court.
Prior to this week’s bombshell that Ginn was yanking all golf sponsorship immediately, there had been hope there would be enough in the kitty to cover this year’s Ginn Championship, a Champions Tour event to be held in the first week of April. Turns out that was nothing more than wishful thinking.
That sound you hear is the cash register slamming shut.
Just as you can’t fault the PGA Tour for dropping a lawsuit in their lap, it’s tough to point the finger at Ginn for rolling the dice and trying to get out of their agreement early. It’s what is known as survival.
One need look no further than this past weekend’s FBR Open to see just how close the tour is getting to the ledge when it comes to sponsors bailing out. Although official numbers are not available as of yet, attendance in Scottsdale was expected to have plummeted compared to recent years. Around the 18th green, there was far too much empty space where, at one time, hospitality tents once stood.
Of course, the PGA Tour is not the only sports entity feeling this current sledgehammer blow delivered by the economy. Far from it.
First, U.S. Bank announces they will not renewing for the Milwaukee event. Then Ginn drops their bad news on both the Champions and LPGA tours. And in Arizona, one of the PGA Tour’s most popular events showed signs of the tanking economy.
To top it off, the PGA Merchandise Show in Orlando, the biggest event of the year on the North American golf retail calendar, saw a significant drop in attendance – some forecasters predicted a downturn at the turnstiles as high seven percent.
Like everything else these days, in business, it’s all about keeping your head above water until the economy takes a turn for the better. Right now, that day looks a long way away.
Shelling out millions for a golf tournament is an expense that many can no longer afford.
It’s a sign-of-the-times reality check.
“We did the best we could, but the economy got the best of us,” Ginn CEO Robert Gidel said this week.
The betting line is they won’t be the last to sing that tune in the near future.
Friday, January 30, 2009
PGA Tour Sues Ginn For Breach Of Contract
Posted: Friday January 30, 2009 6:28 PM
PGA Tour sues Ginn Resorts for breach of contract
The PGA Tour sued Ginn Resorts on Friday, citing breach of contract after the real estate company dropped sponsorship of the Champions Tour Ginn Championship.
Ginn announced on Wednesday it was ending all golf sponsorships immediately, including the Champions Tour event and the LPGA's Ginn Open.
"We regret having to take this legal action, but feel we have no other recourse than to try to recover what had been guaranteed to our members through existing agreements with Ginn Companies,'' PGA Tour spokesman Ty Votaw said in a statement.
Ginn still had three years remaining on its title sponsorship contract with the Champions Tour and had planned a $2.5 million purse for 2009.
The lawsuit was filed in Florida and was first reported by the Florida Times-Union.
Ginn said late last year that it was dropping the PGA Tour's sur Mer Classic because of the ailing real estate market. But the LPGA event in Reunion, Fla., and the Champions Tour stop in Palm Coast, Fla., were both to be played on Ginn courses.
"We also had no forewarning that Ginn was planning to cancel the 2009 Ginn Championship at Hammock Beach, and only learned of the decision when the company issued a release late Wednesday,'' Votaw said. "In fact, we had been in discussions with them on possible modifications to the agreement.''
Ryan Julison, spokesman for Ginn in Celebration, Fla., said the company does not comment on pending legislation.
Last week, Ginn ended its real estate sales and marketing operations "due to the loss of revenue'' that was the primary source of funding the purses and buying television coverage for the LPGA and Champions Tour events.
"We did the best we could, but the economy got the best of us,'' Robert Gidel, Ginn Development's president and CEO, told The Associated Press on Wednesday.
PGA Tour sues Ginn Resorts for breach of contract
The PGA Tour sued Ginn Resorts on Friday, citing breach of contract after the real estate company dropped sponsorship of the Champions Tour Ginn Championship.
Ginn announced on Wednesday it was ending all golf sponsorships immediately, including the Champions Tour event and the LPGA's Ginn Open.
"We regret having to take this legal action, but feel we have no other recourse than to try to recover what had been guaranteed to our members through existing agreements with Ginn Companies,'' PGA Tour spokesman Ty Votaw said in a statement.
Ginn still had three years remaining on its title sponsorship contract with the Champions Tour and had planned a $2.5 million purse for 2009.
The lawsuit was filed in Florida and was first reported by the Florida Times-Union.
Ginn said late last year that it was dropping the PGA Tour's sur Mer Classic because of the ailing real estate market. But the LPGA event in Reunion, Fla., and the Champions Tour stop in Palm Coast, Fla., were both to be played on Ginn courses.
"We also had no forewarning that Ginn was planning to cancel the 2009 Ginn Championship at Hammock Beach, and only learned of the decision when the company issued a release late Wednesday,'' Votaw said. "In fact, we had been in discussions with them on possible modifications to the agreement.''
Ryan Julison, spokesman for Ginn in Celebration, Fla., said the company does not comment on pending legislation.
Last week, Ginn ended its real estate sales and marketing operations "due to the loss of revenue'' that was the primary source of funding the purses and buying television coverage for the LPGA and Champions Tour events.
"We did the best we could, but the economy got the best of us,'' Robert Gidel, Ginn Development's president and CEO, told The Associated Press on Wednesday.
Thursday, January 29, 2009
Ginn Ends All Golf Sponsorships
In a further sign of the disintegration of the Ginn brand, Ginn sent out the following release today:
GINN ANNOUNCES END OF ITS SPONSORSHIPS OF PROFESSIONAL GOLF
Palm Coast, Fla. (January 28, 2009) – Ginn Sports Entertainment, LLC and Ginn Development Company, LLC jointly announced today that they have made the decision to end their active participation in professional golf. Effective immediately, these Ginn companies are withdrawing their sponsorship of the Ginn Championship at Hammock Beach, the Ginn Open at Reunion and the Ginn sur Mer Classic at the Conservatory, will not be hosting or producing any of these professional golf tournaments (including 2009 tournaments), and will no longer be sponsoring professional golfers.
Ginn Development Company is in the real estate resort and community development business - a sector of the economy that has suffered significantly during the credit and real estate meltdown.
Last Friday, real estate sales and marketing operations for Ginn communities were terminated due to the loss of revenue in these businesses. The revenue that was generated from these operations had been used to fund the professional golf tournaments and sponsorships, including paying for the prize money and television coverage for these events.
“We have worked diligently with many others for several months to find solutions to our predicament with respect to these professional golf tournaments,” said Robert Gidel, president and CEO of Ginn Development Company. “We did the best we could, but the economy got the best of us with respect to the tournaments.”
Last August, Ginn Sports Entertainment announced that the Ginn Tribute would not take place in 2009 and 2010.
Following this decision to end all participation in professional golf, it is anticipated that all tournament operations and staffing will cease as part of the continued efforts to cut corporate spending in light of the economy.
“While our association with professional golf has been brief, it has certainly been a highlight for our owners, members, guests and employees,” said Gidel. “We are grateful to all our employees, members and volunteers, and to the professional organizations and charities that we have worked with that have made this experience a memorable one.”
For more information, please contact Ryan Julison, SVP, Corporate Communications, at (321) 377-6877.
GINN ANNOUNCES END OF ITS SPONSORSHIPS OF PROFESSIONAL GOLF
Palm Coast, Fla. (January 28, 2009) – Ginn Sports Entertainment, LLC and Ginn Development Company, LLC jointly announced today that they have made the decision to end their active participation in professional golf. Effective immediately, these Ginn companies are withdrawing their sponsorship of the Ginn Championship at Hammock Beach, the Ginn Open at Reunion and the Ginn sur Mer Classic at the Conservatory, will not be hosting or producing any of these professional golf tournaments (including 2009 tournaments), and will no longer be sponsoring professional golfers.
Ginn Development Company is in the real estate resort and community development business - a sector of the economy that has suffered significantly during the credit and real estate meltdown.
Last Friday, real estate sales and marketing operations for Ginn communities were terminated due to the loss of revenue in these businesses. The revenue that was generated from these operations had been used to fund the professional golf tournaments and sponsorships, including paying for the prize money and television coverage for these events.
“We have worked diligently with many others for several months to find solutions to our predicament with respect to these professional golf tournaments,” said Robert Gidel, president and CEO of Ginn Development Company. “We did the best we could, but the economy got the best of us with respect to the tournaments.”
Last August, Ginn Sports Entertainment announced that the Ginn Tribute would not take place in 2009 and 2010.
Following this decision to end all participation in professional golf, it is anticipated that all tournament operations and staffing will cease as part of the continued efforts to cut corporate spending in light of the economy.
“While our association with professional golf has been brief, it has certainly been a highlight for our owners, members, guests and employees,” said Gidel. “We are grateful to all our employees, members and volunteers, and to the professional organizations and charities that we have worked with that have made this experience a memorable one.”
For more information, please contact Ryan Julison, SVP, Corporate Communications, at (321) 377-6877.
Saturday, January 24, 2009
Exploring Your Alternatives
Things are really heating up in the Ginndom. Unfortunately, most owners do not have a clue what their options are. Many owners are not paying club dues, POA, or even their mortgage. Some can no longer afford to pay, while others have simply reached the end of their rope and refuse to throw more good money after bad.
I am not looking at being a moralist here. Not a week goes by that I don't hear a story about some owner being driven into bankruptcy trying to meet his or her obligations with respect to their Ginn property. Most are angry. They feel they have been duped and lied to. Simply, this is far worse that what is going on in the rest of the economy (Florida properties are down an average of 25-35% while Ginn properties are down as much as 90% - if one can sell at all).
Altough there are many considerations in deciding what to pay and what not to pay (which I will not get into) it comes down to a personal decision. I will never suggest that someone not pay a just bill but, let's face it, if the kids are starving, your decision is obvious. I cannot possibly agree with one raiding his retirement money or kid's education fund just to try and keep an already worthless piece of property. Also, the idea that "I will try and make a few more payments and then see what happens" is only posponing the inevitable and throwing money in the garbage.
I am in no way suggesting what you do - only that you make a decision. Passivity will lead to the poorhouse. Do not allow a bad decision to get worse. There are only 2 choices: 1. Keep paying your mortgage (the other fees are a separate conversation), or 2. stop paying now.
The problem is that too many do not know what to do. This indecision (or automatic deduction from your account) allows one to blindly continue until all their money is used up - and then what??
The difficulty of the owner's decision here is compounded by the ridiculously onerous carrying costs - club dues, taxes and POA fees - all of which must be factored in. Unfortunately, the economics are vastly different from that of a single family house, for example, if we were trying to "weather the storm" and hold on for a few more years. Everyone has to do their own math.
What are the alternatives?
By now, everyone has heard the litany of options recited by the bank or their realtor - loan modification, short sale, deed in lieu of foreclosure or, if you do nothing, foreclosure.
The short sale involves getting an offer and presenting it to the bank. I speak with owners who have had their properties listed for a year or more - with no offers. But what they do not understand is that the bank would probably not accept the offer the property is being listed for anyway! You have a half million dollar mortgage and you're frustrated that you can't even get one lousy offer at that very reasonable $100,000 price that you and your realtor decided to list it at. But you're wasting your time. You're putting the cart before the horse. The lender is unlikely to accept the offer anyway!
What really puts the kabosh on the deal is when an investor (or his broker, etc.) goes to the lender's loss mitigation department with "hat in hand" and has to show two years tax returns, financial statements, bank statements and W2's. Let's face it. If the investor does have assets, now the deal is definitely not happening - and he has just given all of this sensitive financial information to his creditor (that is, the lender who is requesting all of your sensitive information while, at the same time, planning to sue you). This does not make sense.
Finally, most have read about the auctions (or, more properly, the attempt at auctions). Sounds like a reasonable approach for the desperate owner. But how does this play out? And I don't mean the part about there being no bids. What if the auctioneer actually succeeded and received a decent bid of, let's say, $150,000 for that Tesoro property that has a mortgage on it for $500,000. Does the owner know if the lender is willing to forgive the $350,000 that the property is upside down? Or is that owner preparing to pay the deficiency out of his own pocket? So, this owner paid some $10,000 (so I am told) for the privilege of being in the auction without even knowing that the mortgage would be satisfied - even if he did get the offer he was looking for.
I thought the Ginn deal was bad enough. It seems that the advice owners have been receiving in their frustration to deal with the problem is even worse. More tomorrow.
I am not looking at being a moralist here. Not a week goes by that I don't hear a story about some owner being driven into bankruptcy trying to meet his or her obligations with respect to their Ginn property. Most are angry. They feel they have been duped and lied to. Simply, this is far worse that what is going on in the rest of the economy (Florida properties are down an average of 25-35% while Ginn properties are down as much as 90% - if one can sell at all).
Altough there are many considerations in deciding what to pay and what not to pay (which I will not get into) it comes down to a personal decision. I will never suggest that someone not pay a just bill but, let's face it, if the kids are starving, your decision is obvious. I cannot possibly agree with one raiding his retirement money or kid's education fund just to try and keep an already worthless piece of property. Also, the idea that "I will try and make a few more payments and then see what happens" is only posponing the inevitable and throwing money in the garbage.
I am in no way suggesting what you do - only that you make a decision. Passivity will lead to the poorhouse. Do not allow a bad decision to get worse. There are only 2 choices: 1. Keep paying your mortgage (the other fees are a separate conversation), or 2. stop paying now.
The problem is that too many do not know what to do. This indecision (or automatic deduction from your account) allows one to blindly continue until all their money is used up - and then what??
The difficulty of the owner's decision here is compounded by the ridiculously onerous carrying costs - club dues, taxes and POA fees - all of which must be factored in. Unfortunately, the economics are vastly different from that of a single family house, for example, if we were trying to "weather the storm" and hold on for a few more years. Everyone has to do their own math.
What are the alternatives?
By now, everyone has heard the litany of options recited by the bank or their realtor - loan modification, short sale, deed in lieu of foreclosure or, if you do nothing, foreclosure.
The short sale involves getting an offer and presenting it to the bank. I speak with owners who have had their properties listed for a year or more - with no offers. But what they do not understand is that the bank would probably not accept the offer the property is being listed for anyway! You have a half million dollar mortgage and you're frustrated that you can't even get one lousy offer at that very reasonable $100,000 price that you and your realtor decided to list it at. But you're wasting your time. You're putting the cart before the horse. The lender is unlikely to accept the offer anyway!
What really puts the kabosh on the deal is when an investor (or his broker, etc.) goes to the lender's loss mitigation department with "hat in hand" and has to show two years tax returns, financial statements, bank statements and W2's. Let's face it. If the investor does have assets, now the deal is definitely not happening - and he has just given all of this sensitive financial information to his creditor (that is, the lender who is requesting all of your sensitive information while, at the same time, planning to sue you). This does not make sense.
Finally, most have read about the auctions (or, more properly, the attempt at auctions). Sounds like a reasonable approach for the desperate owner. But how does this play out? And I don't mean the part about there being no bids. What if the auctioneer actually succeeded and received a decent bid of, let's say, $150,000 for that Tesoro property that has a mortgage on it for $500,000. Does the owner know if the lender is willing to forgive the $350,000 that the property is upside down? Or is that owner preparing to pay the deficiency out of his own pocket? So, this owner paid some $10,000 (so I am told) for the privilege of being in the auction without even knowing that the mortgage would be satisfied - even if he did get the offer he was looking for.
I thought the Ginn deal was bad enough. It seems that the advice owners have been receiving in their frustration to deal with the problem is even worse. More tomorrow.
Monday, January 5, 2009
Ginn Liquidates Tesoro and Quail West Projects
The credit crunch and slumping real-estate sales have forced struggling Central Florida-based resort developer and operator Ginn Cos. to file to liquidate assets in two of its Florida residential projects, the upscale Tesoro development in Port St. Lucie and Quail West, near Naples.
Ginn, based in Celebration, was unable to refinance its $675 million in debt owed to its lenders, led by Credit Suisse, and filed the voluntary Chapter 7 bankruptcy petitions last week in West Palm Beach as part of an agreement reached with its lenders.
The filing listed liabilities of more than $717 million, with more than $1 million of that unsecured.
In a Chapter 7 liquidation, assets are typically ordered by the court to be auctioned off and whatever can be recovered is divided among secured creditors, after expenses are paid. Existing property owners would not be directly affected, and the golf course operations are expected to continue. None of the unsecured debt is expected to be repaid.
As part of a restructuring agreement, Ginn also said it would relinquish its Laurelmor resort development in North Carolina in return for removal of liens on the property, and agreed to allow lenders to take partial control of Ginn sur Mer, a huge oceanfront resort under development on Grand Bahama Island, through a joint venture arrangement.
The four projects -- Tesoro, Quail West, Laurelmor and Ginn sur Mer -- served as collateral for the debt, and several of Ginn's related companies defaulted on the loans, a $525 million first lien and $150 million second lien, in June 2008.
The company said in a prepared statement that its big Reunion Resort development in Osceola County, and the Hammock Beach Resort, a beachfront development in Palm Beach where Ginn also has administrative offices, are not affected by the action.
"Those are our two largest, but it's important to note that all other Ginn interests are unaffected," said Ryan Julison, a company spokesman. In addition to the four properties involved in the Chapter 7 filings and related restructuring agreement, the company has 11 other projects throughout Florida and other states. One of the developments is Bella Collina, a luxury residential community on the shores of Lake Apopka in south Lake County, where plunging property values have prompted many of the lot owners to default on property payments and taxes.
Robert Gidel, chief executive officer of Ginn Development Co. LLC, said in a statement that the company had been in "extended negotiations" with its lenders both before and after the company's default, and the resulting master restructuring agreement "achieves the best possible result for each of the projects, under the circumstances."
A complete list of assets and creditors was not immediately available. For the Tesoro development in Port St. Lucie, the bankruptcy filing listed assets of $3.5 million.
Gidel said sales at the four communities used as collateral had been "severely affected by ongoing economic pressures, and the drastic downturn in the real-estate market" leading to the defaults. Gidel was traveling and could not be reached for additional comment. Company founder Edward R. "Bobby" Ginn III also was unavailable.
Drew M. Dillworth of Miami was appointed trustee in the Chapter 7 filings, which are expected to be consolidated under Bankruptcy Judge Erik P. Kimball. Miami bankruptcy attorney Paul Steven Singerman is representing Ginn's limited liability companies in the cases.
Ginn, based in Celebration, was unable to refinance its $675 million in debt owed to its lenders, led by Credit Suisse, and filed the voluntary Chapter 7 bankruptcy petitions last week in West Palm Beach as part of an agreement reached with its lenders.
The filing listed liabilities of more than $717 million, with more than $1 million of that unsecured.
In a Chapter 7 liquidation, assets are typically ordered by the court to be auctioned off and whatever can be recovered is divided among secured creditors, after expenses are paid. Existing property owners would not be directly affected, and the golf course operations are expected to continue. None of the unsecured debt is expected to be repaid.
As part of a restructuring agreement, Ginn also said it would relinquish its Laurelmor resort development in North Carolina in return for removal of liens on the property, and agreed to allow lenders to take partial control of Ginn sur Mer, a huge oceanfront resort under development on Grand Bahama Island, through a joint venture arrangement.
The four projects -- Tesoro, Quail West, Laurelmor and Ginn sur Mer -- served as collateral for the debt, and several of Ginn's related companies defaulted on the loans, a $525 million first lien and $150 million second lien, in June 2008.
The company said in a prepared statement that its big Reunion Resort development in Osceola County, and the Hammock Beach Resort, a beachfront development in Palm Beach where Ginn also has administrative offices, are not affected by the action.
"Those are our two largest, but it's important to note that all other Ginn interests are unaffected," said Ryan Julison, a company spokesman. In addition to the four properties involved in the Chapter 7 filings and related restructuring agreement, the company has 11 other projects throughout Florida and other states. One of the developments is Bella Collina, a luxury residential community on the shores of Lake Apopka in south Lake County, where plunging property values have prompted many of the lot owners to default on property payments and taxes.
Robert Gidel, chief executive officer of Ginn Development Co. LLC, said in a statement that the company had been in "extended negotiations" with its lenders both before and after the company's default, and the resulting master restructuring agreement "achieves the best possible result for each of the projects, under the circumstances."
A complete list of assets and creditors was not immediately available. For the Tesoro development in Port St. Lucie, the bankruptcy filing listed assets of $3.5 million.
Gidel said sales at the four communities used as collateral had been "severely affected by ongoing economic pressures, and the drastic downturn in the real-estate market" leading to the defaults. Gidel was traveling and could not be reached for additional comment. Company founder Edward R. "Bobby" Ginn III also was unavailable.
Drew M. Dillworth of Miami was appointed trustee in the Chapter 7 filings, which are expected to be consolidated under Bankruptcy Judge Erik P. Kimball. Miami bankruptcy attorney Paul Steven Singerman is representing Ginn's limited liability companies in the cases.
Saturday, November 8, 2008
Not a Good Day for Ginn Property Owners looking to Sell Now
Stirling Sotheby's Auction of privately owned properties in The Conservatory, Bella Collina, and Reunion was a bust by any measure.
By Toby Tobin
Palm Coast, Florida – November 8, 2008 – In September, Orlando-based Stirling Sotheby's International announced an October 25th auction of 20 privately owned homes located in Bobby Ginn developed Florida communities; The Conservatory, Reunion, and Bella Collina. Some were to be sold "absolute," meaning with no reserve. The auction was finally held today, offering 17 homes, a single lot, and a group of 25 lots. The room was packed with about 200 people. An undisclosed number had pre-registered as potential buyers, plunking down $25,000 refundable deposits. Only a handful placed bids.
Click for Auction brochure
Typical of real estate auctions, the auction company collects an upfront marketing fee from sellers to cover their marketing expenses. (Stirling Sotheby's turned down an opportunity to advertise on GoToby.com.) Commissions are paid by the buyer via a buyer premium, 10% of the winning bid price. The auction was equipped to take bids over the phone or the internet as long as bidders had pre-registered. A seller listing their property could withdraw their property or remove the "absolute" designation any time prior to the opening bid.
The first property offered "absolute" was 7812 Whitemarsh Way in Reunion. It was previously listed for $1,595,000. The suggested opening bid was $550,000. An internet bidder placed a $500,000 bid which turned out to be the only bid. SOLD for $500,000.
Next, two properties were offered at the same time, both in Reunion. They were offered as "buyers choice." The winning bidder could choose which property they wanted. One was a condominium at 7593 Gathering Dr. previously priced at $779,000. The other property was a Reunion home (2,725 SF, 4BR, 4/1B) originally listed for $849,000. The single bid was $375,000. The bidder chose the condo. The home was withdrawn from the auction.
In another bidder's choice auction, three Bella Collina homes were offered:
6,207 SF, 4BR, 4/2B, originally listed for $3,500,000
6,532 SF, 5BR, 4/2B, originally listed for $4,000,000
5,180 SF, 4BR, 4/1B, originally listed for $3,400,000
The single bid was $1,000,000. The bidder chose to take all three for $1 million each.
In a third bidder's choice offering of Reunion homes:
4,895 SF, 5BR, 6B, originally listed for $1,895,000
4,895 SF, 4BR, 5B, originally listed for $1,895,000
The single bid was $500,000. The second home was withdrawn.
Only two properties attracted multiple builders. An offering of 25 home sites offered as a batch in Patriot's Landing in Reunion, did not receive an opening bid. Some properties did not attract opening bids. The only Conservatory entry, a builder model with 4,862 SF, 3BR, 3/1B, originally listed for $2,595,000 was to be sold "absolute." It was pulled from the auction before being offered. The auction began after 11:00 AM. It was done by 1:00 PM. The final tally was 10 homes sold. Only the first home was sold "absolute." All other bids will require lender or seller approval.
In a related sale in October, Elliot Paul & Company conducted an auction, selling a lot in Tesoro Preserve, a Ginn community in Port St. Lucie for $22,500 (plus 10% buyer's premium). The lot had been purchased originally from Ginn for about $200,000.
Over one year ago, an individual owner offered five lots in Palm Coast area Ginn communities. (story) After two absolute sales drew disappointing results, the owner withdrew the other three properties, including a lot in the Conservatory. That lot just closed as a short sale for $79,000. It was originally purchased in 2005 for $385,900.
In my recent newsletter, I pointed out the dismal absorption rate of luxury properties. I've also stated that it will take the appearance of bank-owned properties on the market to set a price that successfully flushes buyers out of the bushes. I think today's auction illustrates that the luxury market is far from that level. Distressed owners, most of whom were investors planning to flip quickly have few options; foreclosure, short sales, and auctions. But at the luxury level, only a small minority fit the distressed label. The market will find its level. These properties will eventually move through the system. The system will return to normalcy.
Those owners who have no need to sell now are not affected by today's market. In fact, they benefit by reduced property tax assessments. Those with staying power can wait out the market. But it will be a VERY long time before 2005/2006 prices are seen again.
I highly recommend Toby's blog at http://www.gotoby.com/ for up to date Ginn news.
By Toby Tobin
Palm Coast, Florida – November 8, 2008 – In September, Orlando-based Stirling Sotheby's International announced an October 25th auction of 20 privately owned homes located in Bobby Ginn developed Florida communities; The Conservatory, Reunion, and Bella Collina. Some were to be sold "absolute," meaning with no reserve. The auction was finally held today, offering 17 homes, a single lot, and a group of 25 lots. The room was packed with about 200 people. An undisclosed number had pre-registered as potential buyers, plunking down $25,000 refundable deposits. Only a handful placed bids.
Click for Auction brochure
Typical of real estate auctions, the auction company collects an upfront marketing fee from sellers to cover their marketing expenses. (Stirling Sotheby's turned down an opportunity to advertise on GoToby.com.) Commissions are paid by the buyer via a buyer premium, 10% of the winning bid price. The auction was equipped to take bids over the phone or the internet as long as bidders had pre-registered. A seller listing their property could withdraw their property or remove the "absolute" designation any time prior to the opening bid.
The first property offered "absolute" was 7812 Whitemarsh Way in Reunion. It was previously listed for $1,595,000. The suggested opening bid was $550,000. An internet bidder placed a $500,000 bid which turned out to be the only bid. SOLD for $500,000.
Next, two properties were offered at the same time, both in Reunion. They were offered as "buyers choice." The winning bidder could choose which property they wanted. One was a condominium at 7593 Gathering Dr. previously priced at $779,000. The other property was a Reunion home (2,725 SF, 4BR, 4/1B) originally listed for $849,000. The single bid was $375,000. The bidder chose the condo. The home was withdrawn from the auction.
In another bidder's choice auction, three Bella Collina homes were offered:
6,207 SF, 4BR, 4/2B, originally listed for $3,500,000
6,532 SF, 5BR, 4/2B, originally listed for $4,000,000
5,180 SF, 4BR, 4/1B, originally listed for $3,400,000
The single bid was $1,000,000. The bidder chose to take all three for $1 million each.
In a third bidder's choice offering of Reunion homes:
4,895 SF, 5BR, 6B, originally listed for $1,895,000
4,895 SF, 4BR, 5B, originally listed for $1,895,000
The single bid was $500,000. The second home was withdrawn.
Only two properties attracted multiple builders. An offering of 25 home sites offered as a batch in Patriot's Landing in Reunion, did not receive an opening bid. Some properties did not attract opening bids. The only Conservatory entry, a builder model with 4,862 SF, 3BR, 3/1B, originally listed for $2,595,000 was to be sold "absolute." It was pulled from the auction before being offered. The auction began after 11:00 AM. It was done by 1:00 PM. The final tally was 10 homes sold. Only the first home was sold "absolute." All other bids will require lender or seller approval.
In a related sale in October, Elliot Paul & Company conducted an auction, selling a lot in Tesoro Preserve, a Ginn community in Port St. Lucie for $22,500 (plus 10% buyer's premium). The lot had been purchased originally from Ginn for about $200,000.
Over one year ago, an individual owner offered five lots in Palm Coast area Ginn communities. (story) After two absolute sales drew disappointing results, the owner withdrew the other three properties, including a lot in the Conservatory. That lot just closed as a short sale for $79,000. It was originally purchased in 2005 for $385,900.
In my recent newsletter, I pointed out the dismal absorption rate of luxury properties. I've also stated that it will take the appearance of bank-owned properties on the market to set a price that successfully flushes buyers out of the bushes. I think today's auction illustrates that the luxury market is far from that level. Distressed owners, most of whom were investors planning to flip quickly have few options; foreclosure, short sales, and auctions. But at the luxury level, only a small minority fit the distressed label. The market will find its level. These properties will eventually move through the system. The system will return to normalcy.
Those owners who have no need to sell now are not affected by today's market. In fact, they benefit by reduced property tax assessments. Those with staying power can wait out the market. But it will be a VERY long time before 2005/2006 prices are seen again.
I highly recommend Toby's blog at http://www.gotoby.com/ for up to date Ginn news.
Monday, October 13, 2008
How Do I Stop The Bleeding?
The big question is what are the alternatives when you realize you are seriously "upside-down" and can no longer afford to pay the mortgage? Is there an exit strategy other than walking away and allowing the bank to foreclose? What about my credit? Will the bank attach my other property?
If you are "losing your shirt" and the kids are near starving, you have to make a common-sense decision. What is your 800 credit score worth? I will never suggest that you do not pay your bills but, let's face it, does it really make sense to go bankrupt "supporting" a lot of dirt? It is hard to believe that people will blindly use up their retirement money or the kid's college tuition fund to actually further compound an already bad decision. It's much more than just not "throwing good money after bad," it's a question of waking up and taking control of your life. You've already lost money. I find it painful to sit by and watch people ruin their lives on top of it.
As a realtor and investor, I see that many owners are willing to take the credit hit, but they just don't want any other personal exposure. They just want to return the deed to the lender but do not want the lender chasing them with a deficiency judgment for which the borrower is personally liable. There are two alternatives that are always discussed: a short sale and deed in lieu of foreclosure.
I discussed short sales in my post of October 5 below. Other than the problems of getting a viable offer and then selling the bank on accepting it, and not asking for the deficiency, and before the buyer backs out ..... it's easy. And if you ask the bank to accept a deed in lieu, they can't say "NO" loud enough. Realtors will tell you that the bank doesn't want the property back (that's why the short sale makes sense, other than their commission), but the lender inexplicably seems to make the short sale way too difficult.
This dilemma is easily explained once you realize that all this knowledge (indeed 99% of all the articles on loss mitigation from so-called experts) is coming from clerks at the bank and realtors. And the realtors are receiving their information from the bank. Is there any surprise that this is all just one-sided information, spread as the gospel, from the party you owe the money to?
The real alternative: have an attorney fight the foreclosure and give the property in exchange for no personal liability. This means using a litigation attorney that specializes in mortgage law and foreclosure defense. Tip: If your attorney asks the bank what they will accept, it's the wrong guy.
Why would the bank just settle for the deed? Simple. When the lender forecloses, all it is doing is seeking to get title to your property. We are offering it to them up front - without a fight - which nowadays costs the lender over $50,000 on average per foreclosure and could take well over a year. In exchange, the bank is giving up the potential of getting a deficiency judgment (which they are not getting so quickly anyway). Given the time and expense, any lender actually lending his own money would rather just take back the property and get it over with, in a heartbeat! (This is where we can insert the discussion about the reasons for the mortgage meltdown.)
Stop asking the clerk at the bank what they will accept and, instead, have a proficient attorney handle it with the bank's attorney. Once the bank no longer has its "stick" of threatening to hurt your credit, you can put yourself in the driver's seat.
If you are "losing your shirt" and the kids are near starving, you have to make a common-sense decision. What is your 800 credit score worth? I will never suggest that you do not pay your bills but, let's face it, does it really make sense to go bankrupt "supporting" a lot of dirt? It is hard to believe that people will blindly use up their retirement money or the kid's college tuition fund to actually further compound an already bad decision. It's much more than just not "throwing good money after bad," it's a question of waking up and taking control of your life. You've already lost money. I find it painful to sit by and watch people ruin their lives on top of it.
As a realtor and investor, I see that many owners are willing to take the credit hit, but they just don't want any other personal exposure. They just want to return the deed to the lender but do not want the lender chasing them with a deficiency judgment for which the borrower is personally liable. There are two alternatives that are always discussed: a short sale and deed in lieu of foreclosure.
I discussed short sales in my post of October 5 below. Other than the problems of getting a viable offer and then selling the bank on accepting it, and not asking for the deficiency, and before the buyer backs out ..... it's easy. And if you ask the bank to accept a deed in lieu, they can't say "NO" loud enough. Realtors will tell you that the bank doesn't want the property back (that's why the short sale makes sense, other than their commission), but the lender inexplicably seems to make the short sale way too difficult.
This dilemma is easily explained once you realize that all this knowledge (indeed 99% of all the articles on loss mitigation from so-called experts) is coming from clerks at the bank and realtors. And the realtors are receiving their information from the bank. Is there any surprise that this is all just one-sided information, spread as the gospel, from the party you owe the money to?
The real alternative: have an attorney fight the foreclosure and give the property in exchange for no personal liability. This means using a litigation attorney that specializes in mortgage law and foreclosure defense. Tip: If your attorney asks the bank what they will accept, it's the wrong guy.
Why would the bank just settle for the deed? Simple. When the lender forecloses, all it is doing is seeking to get title to your property. We are offering it to them up front - without a fight - which nowadays costs the lender over $50,000 on average per foreclosure and could take well over a year. In exchange, the bank is giving up the potential of getting a deficiency judgment (which they are not getting so quickly anyway). Given the time and expense, any lender actually lending his own money would rather just take back the property and get it over with, in a heartbeat! (This is where we can insert the discussion about the reasons for the mortgage meltdown.)
Stop asking the clerk at the bank what they will accept and, instead, have a proficient attorney handle it with the bank's attorney. Once the bank no longer has its "stick" of threatening to hurt your credit, you can put yourself in the driver's seat.
Thursday, October 9, 2008
"Hell Hath No Fury Like A Realtor Scorned"
Did I ever get an earful of comments by Realtors in response to my post of October 5 (see below). Some were almost venomous. One actually threatened to "tattle" to Ginn and the mortgage companies. That's OK. I'll have my 9 year old email back this realtor.
Unfortunately, the advise that most investors are receiving is coming from either a realtor or the bank itself. The bank is not exactly your friend here, if you haven't figured that out! Sadly, sometimes your own realtor isn't either.
I spoke to a Ginn friend the other day who embarassingly confided to me that he was so desperate to get out of his Ginn lot several months ago, that he was talked into bringing $400,000 to the closing table just to get rid of this headache. It was his life savings. He had tried a short sale, with no success, and was finally led to believe that this was the only way. Unbelievable, right? Wait, there's more. The bank told him that they were doing him a favor, inasmuch as the deficiency was actually $440,000. To add insult to injury, he actually received a 1099 earlier this year for the $40,000 that the bank had so magnanimously forgiven!
Another investor complained that he had thrown an additional $10,000 into the marketing of an auction of his property, and nothing sold at the auction. Question. Even if he had received a fair market value bid that was, let's say, $200,000 short of the mortgage, did he or his realtor actually know what the bank was prepared to accept in order to consummate the short sale? The answer is No. So what's the point? (I mean other than trying to make some money for the auctioneer and realtor, that is.)
It is bad enough that a purchaser was conned the first time. And, let's face it, these investors are, for the most part, probably more sophisticated than most. But I just can't bear to see them taken advantage of again, especially when it means throwing good money after bad. Read the papers. It's time to stop the bleeding!
Unfortunately, the advise that most investors are receiving is coming from either a realtor or the bank itself. The bank is not exactly your friend here, if you haven't figured that out! Sadly, sometimes your own realtor isn't either.
I spoke to a Ginn friend the other day who embarassingly confided to me that he was so desperate to get out of his Ginn lot several months ago, that he was talked into bringing $400,000 to the closing table just to get rid of this headache. It was his life savings. He had tried a short sale, with no success, and was finally led to believe that this was the only way. Unbelievable, right? Wait, there's more. The bank told him that they were doing him a favor, inasmuch as the deficiency was actually $440,000. To add insult to injury, he actually received a 1099 earlier this year for the $40,000 that the bank had so magnanimously forgiven!
Another investor complained that he had thrown an additional $10,000 into the marketing of an auction of his property, and nothing sold at the auction. Question. Even if he had received a fair market value bid that was, let's say, $200,000 short of the mortgage, did he or his realtor actually know what the bank was prepared to accept in order to consummate the short sale? The answer is No. So what's the point? (I mean other than trying to make some money for the auctioneer and realtor, that is.)
It is bad enough that a purchaser was conned the first time. And, let's face it, these investors are, for the most part, probably more sophisticated than most. But I just can't bear to see them taken advantage of again, especially when it means throwing good money after bad. Read the papers. It's time to stop the bleeding!
Sunday, October 5, 2008
Why Bother With A Short Sale!
With values plummeting and virtually every owner upside-down, many Ginn owners are looking for ways out of their mortgages. Or they simply can no longer afford to pay the mortgage (especially in addition to the other exorbitant Ginn fees and dues).
We hear that short sales are a way to avoid foreclosure. This is true. But is the hassle really worth the benefit?
In many cases, they benefit others, and don't leave you or your credit any better off than just walking away and allowing the bank to foreclose.
A short sale happens when your lender agrees to release its lien and accept less than the balance owed on the mortgage. The problem is: (1) Actually getting an offer on the property at anything remotely resembling a realistic price (whatever that is!), and (2) Getting the bank to accept the offer even though it may be the best (or only) offer you received after the property has been on the market for nothing short of an eternity.
Who does a short sale benefit? As discussed below, you may not be the major beneficiary.
The lender gets most of its money without having to spend the time and go through the expense of a foreclosure.
The person buying your property presumably gets a deal–a lower price then the debt on the property.
And, perhaps most important, short sales have been latched upon by many realtors as a way of generating income now that the market is in the dumps, since it is likely the only way they can earn a commission nowadays. Be sure to look at who benefits from the short sale: in many cases, it’s everyone but you.
First of all, unless the lender agrees, a short sale doesn’t eliminate your obligations under the mortgage, it merely releases the lien from the property. If you do not negotiate otherwise, you may remain personally liable for any deficiency that results from the ultimate sale of the property.
Secondly, a short sale will seriously damage your credit, not much different than a foreclosure.
Finally, many lenders will issue a 1099-C for any forgiven debt resulting from the short sale. In other words, you can owe taxes on this forgiven amount. As a realtor, I have negotiated short sales for several clients, and there are circumstances when they are the best option. But be wary–in most situations they are likely to be far more beneficial for everybody else than they are for you.
I believe that it is totally irresponsible for a realtor to recommend that a client agree to a short sale unless all lenders agree to accept the short sale as payment in full, agree not to issue a 1099-C, and agree not to file a negative credit report as part of the transaction.
In most cases, it is a hell of a lot easier to have an experienced foreclosure defense lawyer negotiate with the bank to simply take back the property - and avoid the hassle.
We hear that short sales are a way to avoid foreclosure. This is true. But is the hassle really worth the benefit?
In many cases, they benefit others, and don't leave you or your credit any better off than just walking away and allowing the bank to foreclose.
A short sale happens when your lender agrees to release its lien and accept less than the balance owed on the mortgage. The problem is: (1) Actually getting an offer on the property at anything remotely resembling a realistic price (whatever that is!), and (2) Getting the bank to accept the offer even though it may be the best (or only) offer you received after the property has been on the market for nothing short of an eternity.
Who does a short sale benefit? As discussed below, you may not be the major beneficiary.
The lender gets most of its money without having to spend the time and go through the expense of a foreclosure.
The person buying your property presumably gets a deal–a lower price then the debt on the property.
And, perhaps most important, short sales have been latched upon by many realtors as a way of generating income now that the market is in the dumps, since it is likely the only way they can earn a commission nowadays. Be sure to look at who benefits from the short sale: in many cases, it’s everyone but you.
First of all, unless the lender agrees, a short sale doesn’t eliminate your obligations under the mortgage, it merely releases the lien from the property. If you do not negotiate otherwise, you may remain personally liable for any deficiency that results from the ultimate sale of the property.
Secondly, a short sale will seriously damage your credit, not much different than a foreclosure.
Finally, many lenders will issue a 1099-C for any forgiven debt resulting from the short sale. In other words, you can owe taxes on this forgiven amount. As a realtor, I have negotiated short sales for several clients, and there are circumstances when they are the best option. But be wary–in most situations they are likely to be far more beneficial for everybody else than they are for you.
I believe that it is totally irresponsible for a realtor to recommend that a client agree to a short sale unless all lenders agree to accept the short sale as payment in full, agree not to issue a 1099-C, and agree not to file a negative credit report as part of the transaction.
In most cases, it is a hell of a lot easier to have an experienced foreclosure defense lawyer negotiate with the bank to simply take back the property - and avoid the hassle.
Friday, October 3, 2008
Credit Suisse Negotiations Apparently Unsuccessful
Ginn Credit Suisse Negotiations Apparently Not Successful
A flood of emails and phone calls today signal big happenings in the GINNdom
By Toby Tobin
Related story: Ginn Company May Outsource Hammock Beach Sales Duties
Florida Real Estate Developer Ginn Continues Efforts to Restructure Credit Suisse Credit Facility
Palm Coast, Florida – October 1, 2008 – Since the Ginn Company went into default on a $675 million Credit Suisse credit facility June 30, Ginn watchers have been anxious about the outcome. Inquiries have been politely answered with "negotiations are continuing." Suddenly today, my email and phone were flooded with strong hints from known sources as well as anonymous ones that something big was happening in the GINNdom.
The Ginn Company has not released any statement. Nor have they confirmed or denied any of the purported events of the day. But here's what I've put together from the several inputs. While my conclusions are unconfirmed, therefore speculative, the sheer number and consistency of content of today's communications lends credence.
It appears that the negotiations with Credit Suisse to modify and extend the $675 million credit facility failed. I understand that Credit Suisse is exercising its rights to take the collateral underlying the facility. The collateral consists of properties in four Ginn developments:
Ginn sur Mer in The Bahamas
Tesoro in Port St. Lucie, FL
Quail West in Naples, FL
Laurelmor near Boone, NC
Other Ginn communities are not directly affected by Credit Suisse's actions. I'm told the three months of negotiations failed in spite of tireless efforts by those representing Ginn. I can only speculate on Ginn's future roll in these communities. A permanent or interim management contract might be a possibility.
I recently published a rumor that Ginn was considering outsourcing his sales and marketing functions. Apparently that rumor gained momentum today. Sources were unwilling to confirm details, but there were apparently several staff cuts today, including some with long tenure at the GINNdom.
Ginn, finally forced to make bold moves as his options become more limited, seems to be cutting deeper into what was once his core staff, those who were with him during the good times. Perhaps these were not the right people to help Bobby through today's tough times. Clearly reducing unessential and/or unproductive staff will help mitigate the cash flow crisis. Although the result of the Credit Suisse negotiations was not what was hoped for, its conclusion might allow Ginn to focus more on his remaining assets.
courtesy of Toby Tobin
http://www.gotoby.com/
A flood of emails and phone calls today signal big happenings in the GINNdom
By Toby Tobin
Related story: Ginn Company May Outsource Hammock Beach Sales Duties
Florida Real Estate Developer Ginn Continues Efforts to Restructure Credit Suisse Credit Facility
Palm Coast, Florida – October 1, 2008 – Since the Ginn Company went into default on a $675 million Credit Suisse credit facility June 30, Ginn watchers have been anxious about the outcome. Inquiries have been politely answered with "negotiations are continuing." Suddenly today, my email and phone were flooded with strong hints from known sources as well as anonymous ones that something big was happening in the GINNdom.
The Ginn Company has not released any statement. Nor have they confirmed or denied any of the purported events of the day. But here's what I've put together from the several inputs. While my conclusions are unconfirmed, therefore speculative, the sheer number and consistency of content of today's communications lends credence.
It appears that the negotiations with Credit Suisse to modify and extend the $675 million credit facility failed. I understand that Credit Suisse is exercising its rights to take the collateral underlying the facility. The collateral consists of properties in four Ginn developments:
Ginn sur Mer in The Bahamas
Tesoro in Port St. Lucie, FL
Quail West in Naples, FL
Laurelmor near Boone, NC
Other Ginn communities are not directly affected by Credit Suisse's actions. I'm told the three months of negotiations failed in spite of tireless efforts by those representing Ginn. I can only speculate on Ginn's future roll in these communities. A permanent or interim management contract might be a possibility.
I recently published a rumor that Ginn was considering outsourcing his sales and marketing functions. Apparently that rumor gained momentum today. Sources were unwilling to confirm details, but there were apparently several staff cuts today, including some with long tenure at the GINNdom.
Ginn, finally forced to make bold moves as his options become more limited, seems to be cutting deeper into what was once his core staff, those who were with him during the good times. Perhaps these were not the right people to help Bobby through today's tough times. Clearly reducing unessential and/or unproductive staff will help mitigate the cash flow crisis. Although the result of the Credit Suisse negotiations was not what was hoped for, its conclusion might allow Ginn to focus more on his remaining assets.
courtesy of Toby Tobin
http://www.gotoby.com/
Ginn Sur Mer Bahamas Foreclosure Fears
Concerns were mounting last night that a group of international banks might foreclose on the $4.9 billion Ginn Sur Mer development in Freeport and Bahama's West End, although a spokesman for the resort developer said discussions with the lenders were "ongoing and nothing is decided." Sources dose to the development said yesterday that a lending syndicate headed by Credit Suisse were now threatening to take possession of the Grand Bahama project after months of protracted negotiations over a $675 million loan that Ginn defaulted on this summer. It is understood that the lending syndicate has a mortgage that covers half of Ginn's more than-2,000 acre site, encompassing some 1,400 lots, which was taken out as security for the loan. However, Ryan Julison, Ginn's vice-president of communications, said talks with the Credit Suisse syndicate on the defaulted loan and a solution to this were still continuing with nothing resolved. "We are still negotiating," he told The Tribune. "We're working hard to restructure this. Many, many things have been discussed, but nothing has been decided or formalised. It's been going for some time, is quite complex and is something we want to close. "Nothing has been decided and nothing has been agreed. It's a work in progress. Nothing has been formalised in any regard. We're hopeful we can restructure." It is understood that Ginn had proposed a deal for equity swap, which would have given Credit Suisse and the other lenders an equity stake in the Ginn Sur Mer project and three other developments covered by the same loan. But the lenders were trying to drive a hard bargain and force Lubert Adler, the real estate private equity firm based in Philadelphia that works in partnership with Ginn and provides it will seed capital for its projects, including the Ginn sur mer development, to invest more equity. And Tribune sources have also suggested there is a real fear that, if the Credit Suisse group moves to foreclosure or takes an equity stake, Prime Minister Hubert Ingraham will move to renegotiate the original Heads of Agreement obtained from the Christie administration. He is thought to believe the terms are too generous. But Mr Julison said last night he was unsure whether this scenario was a concern. "There's a number of hypothetical situations, but we're not focused on 'what ifs'," he said. "We're focused on the negotiations and the restructuring." Mr Julison also denied claims that Ginn was poised to file for Chapter 11 bankruptcy protection as a result of its financial difficulties, adding: "There's no truth to that at all." Ginn, which has also purchased the Old Bahama Bay Resort as part of its West End development, has continued with marina and infrastructure work at the site, having escrowed $160 million into bank accounts that cannot be touched by the lending group. The defaulted loans are with two Ginn-affiliated companies - Ginn-LA CS Borrower LLC and Ginn-LA Conduit Lender Inc. The companies failed to make a June 30 payment and then entered into a 30-day forbearance agreement. Such an agreement allows a company to keep its property while working out a new payment plan. Robert Gidel, Ginn's president, said at the time: "Due to the ongoing slowdown in the residential real estate market, it became clear that it would not be possible to meet the homesite sales objectives necessary to make payments due under the credit facility." Any further problems for Ginn will deepen Grand Bahama's economic woes, with the island having never fully recovered from the 2004 hurricane season, Royal Oasis closure and Grand Bahama Port Authority (GBPA) ownership battle.
Source: The Tribune
Source: The Tribune
Friday, September 19, 2008
Orlando Business Journal - Ginn Buyers Look At Two Options: Mortgage Workouts, Lawsuits
Friday, September 19, 2008
Ginn buyers look at two options: Mortgage workouts, lawsuits
Orlando Business Journal - by Anjali Fluker
Two South Florida law firms are offering two new options to financially ailing buyers of Celebration-based Ginn Co. resort properties.
Deerfield Beach-based Ticktin Law Group PA has agreed to accept a $1,500 retainer for each homebuyer to work with banks to help buyers avoid foreclosure.
If settled with the banks through a deed in lieu of foreclosure — which allows the borrower to get out of the deal by returning the property to the lender without a foreclosure — the firm would receive another $1,500.
In addition, Fort Lauderdale-based Salpeter Gitkin LLP offered 17 property owners unable to afford to take legal action on their own the chance to be part of a lawsuit filed against Ginn’s Tesoro Preserve in St. Lucie County. Law firm founding partner Eric Salpeter said he offered buyers a reduced rate to be able to protect their rights, but he declined to share specifics on that rate.
The suit claims Ginn’s sales agents violated the Florida Deceptive and Unfair Trade Practices Act by making claims that nearby properties were worth more than market values, and violated the Interstate Land Sales Act by not fully completing disclosure requirements.
Ginn representatives could not be reached by press time.
Ginn already faces other lawsuits, including a federal suit filed by 99 investors in Michigan that shifted to Florida in February and an Orange County Circuit Court suit filed by a New Jersey couple. Both make similar claims that buyers were tricked into buying home sites at artificially inflated prices.
Sources said more lawsuits could soon follow for buyers of three other Ginn resorts: Bella Collina in Lake County, Reunion in Osceola County and Hammock Beach Resort in Palm Coast.
Although the two options for buyers are on opposite ends of the spectrum, New York attorney and property owner Hilton Wiener, also a plaintiff in the Tesoro Preserve suit, said they offer buyers a chance to make up for the losses they suffered from buying in Ginn’s Florida resort communities.
“I speak to investors all the time, and they just don’t know what to do,” said Wiener, who bought a lot in Tesoro Preserve and a condo in Reunion several years ago for a total of $665,000. “The more pressing problem is mortgages, club dues, HOA fees — it’s literally bankrupted people.”
Peter Ticktin, senior managing partner for the Ticktin Law Group, said while he mostly handles foreclosure litigation, this particular case is more for the property owners who want to avoid the courts.
Ticktin said fewer than 10 clients have signed up for the deed-in-lieu-of-mortgage option so far, but he anticipates that number could reach about 50. Although the option allows buyers to protect their credit by avoiding foreclosure, the agreement must first be approved by the mortgage-holding banks or lenders.
“Our purpose is extremely limited here,” Ticktin said. “We’re not being retained to fight the banks — just to get this thing resolved. I have clients who have eaten up their entire life savings just on a mortgage.”
Buyers’ aid
The Ticktin Law Group PA and Salpeter Gitkin LLP are offering investors in Florida Ginn properties an opportunity for relief in two different ways:
Mortgage workout
Buyers who want to avoid foreclosure pay a $1,500 retainer upfront, and senior managing partner Peter Ticktin’s firm will work with banks/lenders on a deed-in-lieu-of-mortgage or other deal to give the property back. If successful, another $1,500 is paid to the firm. If unsuccessful, buyers could pursue other legal action.
Lawsuit
Founding partner Eric Salpeter of Salpeter Gitkin LLP said rather than individual buyers taking on the financial burden of filing separate lawsuits, he’s offering reduced rates to compile buyers into a single lawsuit. The suit, filed in the 19th Judicial Circuit Court in St. Lucie County, is still open to additional plaintiffs. The suit names as defendants Ginn-LA Wilderness Ltd. LLLP, Ginn Development Co. LLC, Ginn Real Estate Co. LLC and Richard T. Davis, registered agent of Ginn Title LLC.
afluker@bizjournals.com (407) 241-2910
Ginn buyers look at two options: Mortgage workouts, lawsuits
Orlando Business Journal - by Anjali Fluker
Two South Florida law firms are offering two new options to financially ailing buyers of Celebration-based Ginn Co. resort properties.
Deerfield Beach-based Ticktin Law Group PA has agreed to accept a $1,500 retainer for each homebuyer to work with banks to help buyers avoid foreclosure.
If settled with the banks through a deed in lieu of foreclosure — which allows the borrower to get out of the deal by returning the property to the lender without a foreclosure — the firm would receive another $1,500.
In addition, Fort Lauderdale-based Salpeter Gitkin LLP offered 17 property owners unable to afford to take legal action on their own the chance to be part of a lawsuit filed against Ginn’s Tesoro Preserve in St. Lucie County. Law firm founding partner Eric Salpeter said he offered buyers a reduced rate to be able to protect their rights, but he declined to share specifics on that rate.
The suit claims Ginn’s sales agents violated the Florida Deceptive and Unfair Trade Practices Act by making claims that nearby properties were worth more than market values, and violated the Interstate Land Sales Act by not fully completing disclosure requirements.
Ginn representatives could not be reached by press time.
Ginn already faces other lawsuits, including a federal suit filed by 99 investors in Michigan that shifted to Florida in February and an Orange County Circuit Court suit filed by a New Jersey couple. Both make similar claims that buyers were tricked into buying home sites at artificially inflated prices.
Sources said more lawsuits could soon follow for buyers of three other Ginn resorts: Bella Collina in Lake County, Reunion in Osceola County and Hammock Beach Resort in Palm Coast.
Although the two options for buyers are on opposite ends of the spectrum, New York attorney and property owner Hilton Wiener, also a plaintiff in the Tesoro Preserve suit, said they offer buyers a chance to make up for the losses they suffered from buying in Ginn’s Florida resort communities.
“I speak to investors all the time, and they just don’t know what to do,” said Wiener, who bought a lot in Tesoro Preserve and a condo in Reunion several years ago for a total of $665,000. “The more pressing problem is mortgages, club dues, HOA fees — it’s literally bankrupted people.”
Peter Ticktin, senior managing partner for the Ticktin Law Group, said while he mostly handles foreclosure litigation, this particular case is more for the property owners who want to avoid the courts.
Ticktin said fewer than 10 clients have signed up for the deed-in-lieu-of-mortgage option so far, but he anticipates that number could reach about 50. Although the option allows buyers to protect their credit by avoiding foreclosure, the agreement must first be approved by the mortgage-holding banks or lenders.
“Our purpose is extremely limited here,” Ticktin said. “We’re not being retained to fight the banks — just to get this thing resolved. I have clients who have eaten up their entire life savings just on a mortgage.”
Buyers’ aid
The Ticktin Law Group PA and Salpeter Gitkin LLP are offering investors in Florida Ginn properties an opportunity for relief in two different ways:
Mortgage workout
Buyers who want to avoid foreclosure pay a $1,500 retainer upfront, and senior managing partner Peter Ticktin’s firm will work with banks/lenders on a deed-in-lieu-of-mortgage or other deal to give the property back. If successful, another $1,500 is paid to the firm. If unsuccessful, buyers could pursue other legal action.
Lawsuit
Founding partner Eric Salpeter of Salpeter Gitkin LLP said rather than individual buyers taking on the financial burden of filing separate lawsuits, he’s offering reduced rates to compile buyers into a single lawsuit. The suit, filed in the 19th Judicial Circuit Court in St. Lucie County, is still open to additional plaintiffs. The suit names as defendants Ginn-LA Wilderness Ltd. LLLP, Ginn Development Co. LLC, Ginn Real Estate Co. LLC and Richard T. Davis, registered agent of Ginn Title LLC.
afluker@bizjournals.com (407) 241-2910
Tuesday, September 16, 2008
Tesoro Preserve Investors File Lawsuit For Deceptive Trade Practices
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Sep 16, 2008 – A lawsuit was filed last Friday in St. Lucie County against Ginn Development and several of its subsidiaries by 17 owners of lots purchased from Ginn in the upscale Tesoro Preserve golf resort in Port St. Lucie. The complaint alleges several violations of Florida's Deceptive and Unfair Trade Practices Act as well as several counts of fraudulent misrepresentation and breach of contract.
In response to the growing frustration over his disastrous investments in two of Bobby Ginn's much-publicized high end golf resorts, investor Hilton Wiener decided months ago to set up a web site and blog in order to reach out and communicate with similarly situated investors. Upon comparing notes with other investors, it seemed there was a barrage of complaints against the smooth-talking Bobby Ginn and the Ginn marketing machine.
In fact, several lawsuits have already been filed against Ginn. One suit filed by 99 disgruntled Michigan investors alleges that the entire Ginn machine is nothing more than a huge Ponzi scheme since it was promoted as an investment vehicle, in violation of SEC regulations, and the properties were marketed to be flipped and sold at inflated prices. It is alleged that the early purchasers included Ginn, his buddies and employees who made unseemly and undisclosed profits in simply flipping the lots, reselling them for profits of hundreds of thousands of dollars, sometimes in a matter of days.
The response to the Ginn web site was overwhelming. According to Wiener, it seems there are literally thousands of Ginn investors spread all over the world that feel that they have been duped and conned. The properties are worth a mere fraction of their purchase prices. In fielding all the responses, Wiener states that every investor had his own story of being hyped, conned and misled. Some have had to file personal bankruptcy and claim that their lives have been ruined by these deals. Many were extremely angry and simply needed to vent. The common theme among the complaining investors was that the property was promoted solely as a vehicle for a quck flip and easy profit. Investors were specifically targeted as well as those that could little afford it, and they were urged by fast-talking salesman to purchase multiple properties.
Ginn hired a law firm to file a complaint to take down Wiener's website, claiming that it (Ginn) owned the trademark and therefore owned the domain name, arguing that Wiener's site could be easily confused with Ginn's numerous trademarked sites which market high end golf resorts. Wiener contends that his site was for the purpose of owners' exchanging information and that it is simply a matter of free speech. Ginn simply wanted to silence communication among its aggrieved investors. Finally, Wiener and some other investors decided it was time to sue.
According to Wiener, "The biggest threat to any developer is when the buyers start communicating with one another and comparing notes. It is only by joining forces that anything is accomplished. It's way too expensive for any individual to do it alone. The unscrupulous developer counts on the purchasers not banding together."
Although Ginn invariably characterizes investors' complaints as nothing more than the fallout from the recent poor real estate market, Wiener points out that the activities being complained of are highly improper and not at all representative of even the most heavily promoted real estate projects. The instances of misrepresentation by the Ginn salesmen are incredibly irresponsible, according to Wiener. " This is way over the top. Put it this way, the Florida market is down let's say 25%. Ginn properties are down more like 90%. Add in the inflated dues and BS fees and you literally can't give this property away. Don't talk to me about 'greedy investors.' This is fraud, plain and simple!"
# #
PRLog (Press Release) – Sep 16, 2008 – A lawsuit was filed last Friday in St. Lucie County against Ginn Development and several of its subsidiaries by 17 owners of lots purchased from Ginn in the upscale Tesoro Preserve golf resort in Port St. Lucie. The complaint alleges several violations of Florida's Deceptive and Unfair Trade Practices Act as well as several counts of fraudulent misrepresentation and breach of contract.
In response to the growing frustration over his disastrous investments in two of Bobby Ginn's much-publicized high end golf resorts, investor Hilton Wiener decided months ago to set up a web site and blog in order to reach out and communicate with similarly situated investors. Upon comparing notes with other investors, it seemed there was a barrage of complaints against the smooth-talking Bobby Ginn and the Ginn marketing machine.
In fact, several lawsuits have already been filed against Ginn. One suit filed by 99 disgruntled Michigan investors alleges that the entire Ginn machine is nothing more than a huge Ponzi scheme since it was promoted as an investment vehicle, in violation of SEC regulations, and the properties were marketed to be flipped and sold at inflated prices. It is alleged that the early purchasers included Ginn, his buddies and employees who made unseemly and undisclosed profits in simply flipping the lots, reselling them for profits of hundreds of thousands of dollars, sometimes in a matter of days.
The response to the Ginn web site was overwhelming. According to Wiener, it seems there are literally thousands of Ginn investors spread all over the world that feel that they have been duped and conned. The properties are worth a mere fraction of their purchase prices. In fielding all the responses, Wiener states that every investor had his own story of being hyped, conned and misled. Some have had to file personal bankruptcy and claim that their lives have been ruined by these deals. Many were extremely angry and simply needed to vent. The common theme among the complaining investors was that the property was promoted solely as a vehicle for a quck flip and easy profit. Investors were specifically targeted as well as those that could little afford it, and they were urged by fast-talking salesman to purchase multiple properties.
Ginn hired a law firm to file a complaint to take down Wiener's website, claiming that it (Ginn) owned the trademark and therefore owned the domain name, arguing that Wiener's site could be easily confused with Ginn's numerous trademarked sites which market high end golf resorts. Wiener contends that his site was for the purpose of owners' exchanging information and that it is simply a matter of free speech. Ginn simply wanted to silence communication among its aggrieved investors. Finally, Wiener and some other investors decided it was time to sue.
According to Wiener, "The biggest threat to any developer is when the buyers start communicating with one another and comparing notes. It is only by joining forces that anything is accomplished. It's way too expensive for any individual to do it alone. The unscrupulous developer counts on the purchasers not banding together."
Although Ginn invariably characterizes investors' complaints as nothing more than the fallout from the recent poor real estate market, Wiener points out that the activities being complained of are highly improper and not at all representative of even the most heavily promoted real estate projects. The instances of misrepresentation by the Ginn salesmen are incredibly irresponsible, according to Wiener. " This is way over the top. Put it this way, the Florida market is down let's say 25%. Ginn properties are down more like 90%. Add in the inflated dues and BS fees and you literally can't give this property away. Don't talk to me about 'greedy investors.' This is fraud, plain and simple!"
# #
Friday, September 5, 2008
Ginn's Law Firm Succeeds in Taking Down Investor Website
Ginn's lawyers have succeeded in convincing an arbitrator that my domain name, http://www.ginnlawsuit.com/ should properly belong to the Ginn Company. This legal action was done, of course, for the sole purpose of shutting down this line of communication to fellow investors. In an extensive legal opinion, the arbitrator reasoned that the use of the "Ginn" name, which is trademarked, may be confusing to the public. I find it difficult to imagine any real confusion with the Ginn sites unless Ginn would maintain a site to discuss its own ever-increasing problems and litigation .... or the site could somehow be confused with Ginn's own web sites which market upscale golf resort homes and lots. Just click on the ginnlawsuit.com website now and see if that is confusing with the old site. Unless you are in the market to pick up yet another money-losing disaster, I think not.
It's just my opinion, but perhaps Ginn should spend more of its money and resources actually providing the amenities that were promised and honestly speaking with the owners, rather than on expensive lawyers and glitzy PR.
It's just my opinion, but perhaps Ginn should spend more of its money and resources actually providing the amenities that were promised and honestly speaking with the owners, rather than on expensive lawyers and glitzy PR.
Friday, August 29, 2008
Tesoro Auction Sets a New Low
Courtesy of Southern Way of Life, http://www.southernwayoflife.com/
Tropical Storm Faye couldn’t delay forever the absolute auction of a residential lot in Tesoro Preserve, a private golfing community located in Port St. Lucie. Tesoro Preserve is one of the Ginn Resort communities that is rumored to be up for sale or at least used as a bargaining chip to resolve a $675 million dollar loan default to a group of 50 private investors orchestrated by Credit Suisse. Collectively there are three distinct communities referred to as “The Club’s”; Tesoro, Tesoro Preserve, and The Tesoro Beach Club.
Mr. Reed Hartman, Senior Associate, Elliot Paul & Company Auctioneer verified this morning that lot 183 SE Via Sangro was sold at the “absolute auction”. An absolute auction means that there is no minimum bid and the property is to be sold to the highest bidder, regardless of the price. The lot was originally purchased for $245,150 in 2006 and sold for $49,000 plus a 10% buyer’s premium for a grand total of $53,900. According to Reed eight bidders registered for the absolute auction.
Tesoro Preserve is one of Ginn’s trophy private gated golf communities with a 100,000 square foot luxurious club house that we found to be ostentatious. Amenities include two Signature 18 hole Golf Courses by Arnold Palmer and Tom Watson. A third golf course designed by Nick Price is also available to members. Tesoro boasts a world class Swim and Racquet Club, golf practice facilities, oceanfront Beach Club on nearby Hutchinson Island, and fitness center. Homes originally ranged in price from $700,000 to well over $6 million. Their website currently lists home sites for $400,000 to well over $1.8 million.
Someone sure got a deal, but what about those dues…
Tropical Storm Faye couldn’t delay forever the absolute auction of a residential lot in Tesoro Preserve, a private golfing community located in Port St. Lucie. Tesoro Preserve is one of the Ginn Resort communities that is rumored to be up for sale or at least used as a bargaining chip to resolve a $675 million dollar loan default to a group of 50 private investors orchestrated by Credit Suisse. Collectively there are three distinct communities referred to as “The Club’s”; Tesoro, Tesoro Preserve, and The Tesoro Beach Club.
Mr. Reed Hartman, Senior Associate, Elliot Paul & Company Auctioneer verified this morning that lot 183 SE Via Sangro was sold at the “absolute auction”. An absolute auction means that there is no minimum bid and the property is to be sold to the highest bidder, regardless of the price. The lot was originally purchased for $245,150 in 2006 and sold for $49,000 plus a 10% buyer’s premium for a grand total of $53,900. According to Reed eight bidders registered for the absolute auction.
Tesoro Preserve is one of Ginn’s trophy private gated golf communities with a 100,000 square foot luxurious club house that we found to be ostentatious. Amenities include two Signature 18 hole Golf Courses by Arnold Palmer and Tom Watson. A third golf course designed by Nick Price is also available to members. Tesoro boasts a world class Swim and Racquet Club, golf practice facilities, oceanfront Beach Club on nearby Hutchinson Island, and fitness center. Homes originally ranged in price from $700,000 to well over $6 million. Their website currently lists home sites for $400,000 to well over $1.8 million.
Someone sure got a deal, but what about those dues…
Sunday, August 10, 2008
Investor Lawsuit Against Ginn
As you may know, there is a group of disgruntled investors banding together to bring an action against Ginn. I am participating in this group solely in my capacity as an investor in both Tesoro Preserve and Reunion. I am not admitted to practice law in Florida and I am not handling this lawsuit. If you are interested in participating or learning more, drop me an email at Hill2020@aol.com and I will put you in touch with the firm handling the case. We have engaged a first class Florida litigation firm. There is strength in numbers.
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