Colonial Bank has posted the Avana housing development project on bank foreclosure listing. The proposed residential development in a 1,000-acre property located in Southwest Austin is the fourth largest land foreclosure that occurred in Central Texas since June.
According to local industry experts, more foreclosures are expected in the coming months as the commercial real estate market crisis is devouring more stalled residential developments and vacant new office projects.
The notice of foreclosure showed that Colonial Bank listed the property for auction scheduled on September 1 after the developer, Transcontinental Realty Investors Inc. defaulted on its loan amounting to almost $31.3 million.
The proposed development project, estimated to cost about $200 million, consists of a golf course, a resort hotel and about 1,100 luxury houses. According to industry experts, Colonial officials and the developer are negotiating to workout possible terms that would prevent foreclosure of the property.
However, Colonial Bank President Tony Stephenson did not give an assurance that a deal could be worked out between the bank and the developer.
According to records, Transcontinental subsidiaries JMJ Circle C West and JMJ Circle C East are the partners named in the notice of foreclosure. Carl Rossi Jr. of Transcontinental said that the company's original mortgage of $31.3 million had been reduced to $22 million before it defaulted for two months.
Rossi said that the land was acquired for nearly $24 million in 2004. The original plan was for the project to commence before the end of 2006 and to build houses with prices ranging from $300,000 to over $1 million.
Infrastructure amounting to $1 million has been installed, including main road grading and some utilities. However, the construction work was stopped early in 2009 when the developer started to default on its mortgage payments.
Industry experts said that negotiations between both parties include the possible extension of the loan for about two years in the hope that the commercial real estate market in Austin would improve during the period and the developer would be able to sell some lots.
Experts said that since the middle of 2008, many lenders preferred to foreclose on troubled properties rather than workout solutions with borrowers, such as extending loans or forgiving payments.
They expect more foreclosures, especially with residential development projects that have been affected by the housing market crisis and new office properties that have difficulty finding tenants.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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