Fannie Mae and Freddie Mac blocked the sale of a beleaguered condo complex in Pembroke Pines.
The companies’ temporary injunction essentially halts the planned sale of Heron Pond in western Broward County that’s been in the works for a year. It also puts on hold the planned distribution of proceeds to unit owners. A court-appointed receiver had determined that a sale was the best course of action due to structural safety concerns. The complex was evacuated last year.
On Friday, receiver Daniel Stermer designated Miami-based Integra Real Estate as the purchaser of the 25-acre complex with 19 two-story lakefront buildings at 8400 Southwest First Street. Integra had offered $20.5 million last month for Heron Pond as the stalking horse bidder, setting the floor price should it have gone to auction.
An auction scheduled for last Thursday was canceled because no additional qualifying bids were submitted by the deadline of last Tuesday.
Under the current zoning, Integra –– led by Nelson Stabile, Paulo Tavares de Melo, Victor Ballestas and Cory Yeffet –– would be able to build a 321-unit project with one or multiple buildings up to eight stories or 100 feet tall, whichever is less.
But the sale process is on hold. Federal Judge Judge Rodney Smith in Fort Lauderdale on Thursday granted Fannie Mae and Freddie Mac’s emergency motion for a temporary restraining order. It is in effect until a scheduled hearing in front of Smith on Oct. 9.
Fannie Mae and Freddie Mac’s argument is based on federal law that bans the sale of property that serves as collateral for a Fannie Mae or Freddie Mac loan without the consent of the Federal Housing Finance Agency.
Fannie and Freddie hold first position liens on eight of the condos at Heron Pond, according to their motion filed on Wednesday of last week, one day before the canceled auction.
In court filings, Fannie and Freddie argue that because they are under the conservatorship of the Federal Housing Finance Agency, any action that would impair the agency’s power is banned, according to the Wednesday filing. Freddie and Fannie’s motion to halt the sale is partly based on the argument that FHFA “must consent before any sale takes place,” according to their court filing.
Stermer took over as receiver last year after Pembroke Pines city officials issued multiple notices of violations of the Florida building and fire codes at some of the buildings. Some unit owners also had alleged mismanagement by prior board members.
Prior to Stermer’s appointment, 122 units had been evacuated. Last August, all remaining units were evacuated after engineers working on repairs found additional structural deficiencies in buildings. Stermer decided to sell the property after he determined that assessments of damage and repair costs prior to his appointment were “significantly inadequate to assess the true nature, scope, and extent of the damage facing the association,” he said in court filings.
Since then, the court granted Stermer’s request to terminate the condo form of governance and to proceed with the marketing and sale. In a statement, Stermer wrote that the sale can’t occur until the court rules or the parties resolve their issues. “We look forward to resolving the removal action and moving forward with the sale of the property as quickly as possible,” Stermer said.
In his report to the court last month, Stermer wrote that the issue boils down to Fannie and Freddie asserting that “unless they are paid in full from the sale … they will not consent to the sale.” Essentially, this means that they are asking that sale proceeds designated for unit owners, including those with no mortgages on their condos, are first used to pay back Fannie and Freddie in full.
This will reduce “the pro rata share to be distributed to each unit owner,” Stermer wrote.
The sale to Integra would break down to $67,434 per unit.
Records show one of the two Freddie mortgage loans on a Heron Pond unit is $132,000; and some of the Fannie mortgages range from the high $100,000s to over $300,000, though that’s the amount lent and doesn’t include how much has been paid off.
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