Behind some of the area's biggest condo ghost towers -- Tao Sawgrass in Sunrise and Trump International Hotel & Tower in Fort Lauderdale -- lies one very cash-strapped bank. Chicago-based Corus Bank has become a poster child for the condo meltdown, because it lent money to at least 16 South Florida condo projects before the real estate bubble burst. Now that condos aren't selling, developers can't repay their construction loans, so Corus is taking a hit.
All summer, the bank has appeared to be on the brink of failure, reporting hundreds of millions of dollars in losses. Bloomberg.com reported that the Federal Deposit Insurance Corp.could take over the bank as early as this week. That hasn't happened yet, but the dire predictions have stirred plenty of concern about what will happen to local, Corus-funded condo projects.
"I think that there's just too much uncertainty right now," says local attorney Joseph Altschul, who represents buyers in Trump International and Tao who are trying to get their condo deposits back.
Corus now owns Tao, having taken the project back from the developer last fall. If the FDIC seizes Corus and then sells it to private investors, the new Tao owners will probably start renting and selling units at greatly reduced prices, lowering the value of the few units in the building that have closed (property records indicate that's just 48 out of 396 units). Plus, there's no telling if, or for how long, the new owner would keep covering the cost of maintaining the twin condo towers. So current owners could get stuck with rising maintenance fees and plummeting property values.
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Sounds delightful, doesn't it? "I would really be a little nervous right now," Altschul says.