Considered to be one of its largest real estate losses, Eastern Financial Florida Credit Union is seeking a $37.25 million deficiency judgment against a Miami developer on a foreclosed condominium.
According to the Palm Beach Daily Business Review, Merco Group guaranteed the loan on the West Palm Beach, Fla.-based site that would house the condos that were never built. Eastern Financial foreclosed on the site in December 2008 and filed a deficiency claim judgment in January.
In 2008, the property was appraised at $43 million, the publication reported. Eastern Financial is seeking interest and fees and loan principal. The deficiency judgment, which is the appraised value of the property on the foreclosure sale date minus the total amount owed on the loan, means a borrower must still pay even if the lender has foreclosed. Merco Group said Eastern Financial is not entitled to both the judgment and the property.
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"NCUA doesn't comment on pending litigation," said John McKechnie, NCUA director of public and congressional affairs. The agency placed Eastern Financial into conservatorship on April 24. The $1.6 billion Space Coast Credit Union is currently overseeing operations.
Merco Group has been sued four times since 2007 over foreclosed properties. Prior to the conservatorship, the Florida Office of Financial Regulation told Credit Union Times that it had received some appraisal reports on properties in West Palm Beach and Fort Piece, Fla.
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