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 A New "Mark" Against Collateral Value. No Water, View next topic
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Aristotle
Nitroglycerin


Joined: 05 Dec 2007
Posts: 594
Location: On a sand dune, sipping a cold soda

A New "Mark" Against Collateral Value. No Water,
PostPosted: Sat Feb 21, 2009 7:56 am Reply with quoteBack to top

See: http://www.pe.com/localnews/ri.....34f50.html

First SunCal blows its appeal of a trial court's decision that the Environmental Impact Report for its Beaumont, CA failed to prove, by substantial evidence, that the local water agency has enough drinking water to supply the project.

Then, a second trial judge makes the same ruling for a neighboring project. No proof of water supply, no project. SunCal is not likely to see their Beaumont land having any recoverable value any time soon.

I wonder if, before it bought its land in Beaumont, SunCal actually checked to see if there was enough water for the project...or was this one of those "special" Lehman financed project where Lehman didn't really care if the project was ever developed, as long as it was booking its loan fees and pulling cash out of reappraisals of the property.

In Southern California, with its extreme water shortage, financial institutions foreclosing on land development projects will be facing this not-previously-encountered detriment to recovering any of their land acquisition loan investment.

I doubt there's any major real estate lender in the United States who took the trouble to make sure their collateral actually had a proveable water supply.

Tim Geithner, take note. This question needs to be answered BEFORE you decide on the value of development land REO held by troubled banks.

And oh by the way, the same issue exists with development land in Arizona, Nevada, Utah, New Mexico and Colorado.

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Aristotle

As Yogi Berra said "It's like deja vu all over again."
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Aaron
A-Bomb


Joined: 24 Jan 2007
Posts: 824
Location: Atlanta, GA

Re: A New "Mark" Against Collateral Value. No Water,
PostPosted: Mon Feb 23, 2009 7:39 am Reply with quoteBack to top

Not to worry, I'm sure this is yet another reason why they will never break these portfolios up and try to value them. The approach seems to be "prop up the institutions, prop up the asset values, fake the asset values, and delay delay delay".

Its like the anti-Mellon approach.
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