The $12 Million Default. As If It's Isolated (Bwhahahaha)

Tuesday, October 13, 2009 , , , , 0 Comments


Just a little reminder here that it isn't the Bank of Americas and Wells Fargos that we need to worry about, it's these guys. The not too big to fail. America. You know, the shit that makes us what we are; small business, community banks, your average asshat who found himself over his head in the heady days of easy Greenspan money. Your recovery is not hidden on Bank of America's balance sheet, it's written in the tale of community business and sorry to break it to Turbo Timmy but this is the America his TBTF friends made for us.

Suck it.

Via Wilmington, NC's Star News:

During the mid-decade real estate boom, the exuberance of lenders and borrowers alike took hold here with a feverish intensity.

But after the market turned stone cold, two local banks failed – Wilmington’s Cape Fear Bank and Cooperative Bank.

One local couple’s legal problems provide a rare peek inside the region’s financial sphere during the investing frenzy that seized the area and ultimately led to the banks’ collapse.

Over a 14-month period, the two failed banks and four others in Wilmington lent a total of $21 million to two novice real estate investors – drugstore owners John Davie and Charlene Waggett, according to court documents.

There have been no charges or allegations of wrongdoing on the part of the Waggetts, who filed for personal Chapter 11 bankruptcy protection on May 19. They owe unsecured creditors more than $12 million, according to a disclosure report filed in bankruptcy court last month.

John Waggett, when contacted this week, would not speak for attribution.

The Waggetts’ bankruptcy attorney, Trawick “Buzzy” Stubbs of New Bern, described the couple as “a good, hard-working family who got caught up in the hype of the investment boom like many other investors.”

Their Chapter 11 filing and a current lawsuit filed against them March 19 by BB&T provide a snapshot of the times.

OK WTF, "Buzzy"? Seriously? You've got to be fucking kidding me.

Wait a minute, stay with us here, kids.

It’s highly unusual for banks to make more than a couple of loans at a time to novice investors – even those well known in the community as successful business people who had the wherewithal to make their loan payments, said Tony Plath, associate finance professor at the UNC Charlotte Belk School of Business.

“You only take on a few projects from a new developer at a time. You need to be able to generate operating cash flow,” Plath said. This enables the investor to sell a property to gain cash to pay on these short-term acquisition and development loans.

This, however, doesn’t appear to have been the banks’ practice in the Waggetts’ case. “It does not appear that the Waggetts sold any of the property that they invested in,” Stubbs said.

The six banks, however, made loans on different properties the Waggetts were developing. And those loans often were separated by only days, a few weeks or months, according to when the deeds of trust were filed with the New Hanover County Register of Deeds.

Three of the loans, totaling about $4 million, were from Cape Fear Bank, where John Waggett served as a board member at the time. It is not illegal for a bank to lend to a board member as long as it is on the same terms that other customers receive.

The first loan, however, was not from Cape Fear. Rather it was a line of credit from BB&T for $150,000.

Countrywide lent nearly $2 million to the Waggetts’ D&CW Properties LLC for two Carolina Beach condominiums, according to court documents. Deeds of trust in connection with both loans were filed on the same day – May 31, 2005 – with the New Hanover County Register of Deeds. Five of the loans – to Waggett businesses DCBB LLC and BWBW Properties Inc. – came from Cooperative Bank and totaled more than $4.8 million on seven properties, according to court documents. Those loans were all eventually foreclosed, according to public records.

Other banks that lent to the Waggetts and their limited liability corporations were Crescent State Bank, Regions Bank and BB&T.

The Waggetts borrowed nearly $2 million from BB&T in August 2005 to buy property at 619 Carolina Beach Ave. South to build a duplex, according to court documents.

In an affidavit, BB&T Assistant Vice President Carlo D. Laurore Jr. said that at the time the loan was made “or shortly thereafter, the Waggetts asked if BB&T would be interested in financing the acquisition and development of other property at Carolina Beach.

And you think this is an isolated case?

Bwhahahahahahaha! Get your ticket ready for the pain train!

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

0 comments: