Florida Real Estate Bust Catches CU Giant in $30 Million Bind

WEST PALM BEACH, Fla. – 10/25/2007 - In another sign of credit union exposure to the latest Florida land bust, Eastern Financial Florida CU last week filed suit to foreclose on a $30 million loan it made to a now-troubled condominium project. The developer, well-known Merco Group Inc. of Miami, has failed to make payments on the loan since June, according to documents filed in Palm Beach County Circuit Court. The developer has failed to break ground on the 338-unit condo development overlooking Florida’s Intercoastal Waterway due to inadequate preconstruction sales. The condos were supposed to sell for amounts ranging from $350,000 to $4 million each.

The project is the latest in the once-heated Florida real estate market to embarrass credit unions, with three medium-sized credit unions, Norlarco CU, Huron Rivera Area FCU and New Horizons Community CU, having failed because of speculative loans in southwest Florida, and dozens more exposed to loan participations in those projects. (CU Times)