Want to Buy Some Crappy Properties? Hit Up the FDIC
For more than a year, the Federal Deposit Insurance Corp. has been seeking a buyer for 36 partially built condos it inherited from a high-flying, short-lived Atlanta bank. The agency has been fending off vandals, haggling with architects and uncovering the developer's blunders, all in a bid to dispose of this condo project, just one of the 2,554 foreclosed assets dumped onto its books. "These are properties with a bad story," says Jim Gallagher, a senior official in the FDIC's Division of Resolutions and Receiverships. "What we're trying to sell is something that is rundown or not completed or has some property damage."
In the past two years, the FDIC has taken over 150 failed banks. In the process, it has seized more than 5,000 houses, subdivisions, buildings, parcels and other foreclosed assets. The current backlog of property stuck on the agency's books, with an appraised value of $1.8 billion, ranges from an $18,700 clapboard home with stained carpets in Birmingham, Ala., to a $1.7 million mountainside lodge with a heated driveway in Steamboat Springs, Colo.
Taxpayers will be grappling with this flotsam for years to come, one example of how the crisis will linger long after the economy begins to revive. At a recent FDIC auction in Atlanta, the agency offered a four-unit condo building it had already sold once before -- after the savings-and-loan crisis two decades ago.
These days, it takes the FDIC on average six to eight months to sell a property. Dresden Heights, tied up with unpaid bills, a lawsuit and complex right-of-way questions, is among its toughest prospects.
The project was the brainchild of Quantum Homes and its chief executive, Ramsey "Jim" Salahat. In March 2006, just as Atlanta's housing market was peaking, Mr. Salahat took out a $3.78 million, 18-month loan from Main Street Bank in Covington, Ga., to purchase and prepare 5.3 acres abutting an interstate entrance ramp.
Oh come on, that sounds like a steal.
You can find all the crap for sale by the FDIC on their website here. Free Sheila Bair bobblehead with every $500,000 distressed property purchase - act now! Everything must go!
Update: an astute JDA reader who has previous experience with purchasing distressed FDIC properties from that little S&L crisis in the 80s offers us this insight into dealing with our favorite deposit insurance friends:
"You probably never had the pleasure of dealing with FDIC or its evil counterpart, RTC, but I have as numerous institutions failed in the 80s and these two agencies had a lot of property to dispose of. Imagine the arrogant dimwit manning the window at your post office but put that person in charge of disposing of the properties and you will get the picture."
Yeah, that sounds like a winner to me.