The market spoke and the lender refused to listen. What do they think will change in the future aside from additional carrying costs, and higher interest rates?

The bank would rather hold the property to get top dollar for a value that was there when the loan was taken out years ago. The foreclosure auctions have become a joke. The bank sets the reserve for the loan balance plus back payments and other fees. The banks buy back the property most of the time only to list it as an REO. The longer the property sits, the more price reductions there will be. When it is all said and done, I have no doubt that property will sell for about the same price as the auction. The REO's want to see cash offers. No smart investor will pay cash without a steep discount. Good luck to the lender getting their over inflated value.

The pals of those who went bust wanted to buy for cheap. De facto same owners for less dough...not that I love bankers, but I understand their decision to some extent.

Brown,

What about the other bidder, Tom Karle, who was outbid at the last minute by the neighbor group? He dropped out of the bidding when it hit $298K. He has no connection to the PPCDC and, as Jamie mentioned in the article, Karle is unpopular with people who live in the Patterson Park neighborhood. Why are you criticizing the neighbors group for trying to buy it on the cheap when Karle wanted to buy the property at a 62% discount?

Jamie, I enjoyed the article Saturday.

The unanswered question in my mind is: $790,000?!?! Really?! Yes, property values were rising in that area, yes there's probably some fees factored into that number, but it still seems pretty high.

So the "62% discount" isn't really as large as it seems... there's no way that building was ever worth $790 even at the peak

Really and for true, Grace -- but that's what is OWED on the property, which includes the late fees and other costs that pile up after a loan goes into default.

The original loan was for $465,000 in 2004, an amount that was increased to $700,000 at the end of 2005 -- presumably to cover the cost of renovating.

Patterson Park Resident,

as you said yourself - the bank didn't want to give to anybody for cheap; nether the person you mentioned (and seem not to favor), nor the other group of persons (of which you have more favorable opinion). As Jamie pointed out, it would be interesting to learn where the difference from original mortgage amount, and the final amount had vanished. It would have been really plenty to cover the renovation costs...

Brown, I'm not sure about this particular building, but the CDC did tap the equity of the properties it owned in order to acquire more.

Brown,

I was addressing your implication that the bidders were somehow cheating the system. You stated that they were "pals of those who went bust" and would have been "de facto owners for less dough". Really? Do you have anything to back up this assertion? None of the members of the neighbor group were partners or employees of the PPCDC, so why is it wrong for them to bid on this property? It seems like you have a double standard- or perhaps you're a related party to one of the other bidders.

As any car salesman talking trade-in value will tell you, what you owe is 100% irrelevant to what it's worth. If it was owned free and clear would it be worth zero?

Banks have an accounting reason for delaying the realization of losses. Marking to model and living in fantasy land keeps the balance sheet looking good for as long as possible. Unfortunately the neighborhood suffers. You have to sell a lot of food and drink to cover a 700k mortgage.

Jamie,

yes - tapping equity to buy, that is a recipe that led to the situation none knows the way out from.

It is worth $298. The people have spoken. I love it.

What's especially sad is that the PPCDC was given a grant to cover the cost of the building and renovations. They owe more than three quarters of a million dollars on what was, essentially, a free building.

concernedppresident -

the three quarters of a million dollars or any other sum just don't matter if some wonderful people do what they can for their neighborhood.

The problem is the founder and most of the employees of the PPCDC didn't live in the neighborhood. The founder moved to Canton when things were at their most bleak. The CDC owed the city back property taxes, left behind 150 vacant houses and now a vacant building that, given the cost to them, would have offset operating expenses to keep them in business. The neighborhood could have used an on going concern and 700k would go a long way towards their, or anybody's mission. Every venture started by the CDC's founder failed. In this case taxpayers contributed, the city, state and fed contributed and now, like with the case of slumlords and others who have no genuine stake in the area, residents are left to pick up the pieces. Check last year's City Paper article. They road a real estate bubble. The pres of the CDC made over 100K per year and got out with out bearing any responsibility for the CDC's mistakes. I guess I am too skeptical; I am willing to count the misses as well as the hits. Like a previous poster said, it will take a ton of food and drink to pay back 700k.