11 January 2010

SW Florida Banks, Builders In Bind Over Loans


Lloyd Mandel developed the Shoppes at the Forest center on U.S. 41. 
Now he and SunTrust Bank are on a battle over a mortgage for the property.

Lloyd Mandel says he fulfilled his part of a bargain with SunTrust Bank: He built a strip mall in south Fort Myers, and leased out most of it.

Now Mandel, of Mandel & Simms Real Estate, wants to convert his construction loan to a mortgage at the rate agreed upon two years ago when the project got started.

But, he says, SunTrust won't honor the deal, citing various "outs" in the contract such as a drop in the value of the property.

"We're not going to comment on a particular client," said SunTrust spokesman Mike McCoy. But, he noted, "we obviously are in the business to make loans to creditworthy borrowers."

If banks start exercising their rights on a large scale to get out of agreements to lend, Mandel said, "no piece of commercial property in Lee County is safe if it's got a mortgage on it."

Whatever the future holds, experts say, it's clear in the past few months more builders are facing a troublesome combination of plummeting commercial values and cash-strapped bankers who can't — or won't — make the loans.

Now, with their back to the wall, some builders are fighting back. Tactics include filing to reorganize in bankruptcy court in an attempt to get a judge's intervention.

Mandel said he's considering taking that course, noting the bankruptcy judge has power to write down a commercial loan or otherwise change the terms.

"Since mid-November, I bet I've had a dozen people call recounting similar fact patterns across the Southeast," said Jack Williams, resident scholar at the American Bankruptcy Institute and a bankruptcy professor at Georgia State University. "The story unfortunately isn't new to me. I think it's an indication of things to come."

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