Development Disaster: Scope of foreclosures broadens

November 24, 2008 8:55:12 PM PST
The faces of foreclosure often belong to people who bought more home than they could afford.Now, realtors are reporting an increasing number of cases where people are facing the fall-out through no fault of their own. Some made sizeable down payments on a dream home to be. Others make their mortgage payments on-time, every month. Nonetheless they have become victims of "new development disasters."

This is not how the American dream is supposed to look. Dan and Kelly Savage are newlyweds who thought buying a brand "new" condo would be a great way to start their "new" lives together.

Homeowner Kelly Savage said, "You hear all these stories and they're success stories. They buy in these new buildings, they move in. Maybe it's delayed a month or two - but you never hear of complete and total disasters."

The Savage's were among the first to move in to Ashton Lofts in Lincoln Park in June of 2007. They assumed neighbors would soon follow. Instead, contractors fled. Foreclosure for the builder soon followed.

Dan Savage added, "Every time we tried to get a hold of somebody it was always somebody else's fault and that somebody else could never be reached."

Now, nearly one year and all those mortgage payments later -- the building is still unfinished. The facade is flaking off. The drainage system is incomplete. And during a recent heavy rain, the Savage's discovered contractors never finished sealing the roof. Water poured into their condo, forcing them to rip-up their hardwood floors.

"We pay our mortgage every month and we found out today that we have liens against our place," said Kelly Savage.

More than half of the units here remain unfinished and empty. With the building in bankruptcy they'll likely stay that way.

Elsewhere, other would-be homebuyers find themselves in similar circumstances with even less to show for their investment.

Homebuyer Scott Goldberg is angry. He said, "When you got 10 thousand dollars locked up with nothing to show for, it really puts a damper on everything else in the world."

The Belden place development in north suburban Mundelein where made a deposit looks more like a nature preserve than a subdivision. Not a teaspoon of dirt has been moved since the Scott Goldberg and his wife put down a 10-thousand dollar down payment on a home one year ago.

"It's just holding us from moving forward with our plans with the housing market the way it is now there are some great opportunities out there and we want to start a family in the next year or two." Said Goldberg.

The Belden Place sales office still stands but the doors are locked and there's a newspaper from July outside the front door. Court records show Belden Place is in foreclosure. The Goldberg's deposit is in an escrow account, so they should get their money back in another year "if" their home isn't built.

Despite the home buying heart ache of "both" couples -- industry experts say it may be a "new" reality of the "new" economy. President of the Chicago Association of Realtors, David Hanna said, "I have yet to see the intent to defraud in any of the stories that I've heard or personally witnessed. This is about people making their best efforts and falling a bit short."

A developers' downturn, forcing home buyers to deal with foreclosure through no fault of their own. "At this point we're now investing in a place that we can never sell. We've lost value on our home and we've got liens against our place that we can't resolve," Said Savage.

Neither developer returned our calls for comment. If you're shopping for a new home, experts say be sure to ask a few questions:


- What percentage of financing has the developer secured?

- How many homes or condos have already been sold?

- and research other properties built by the developer.

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