Atlanta foreclosure homes for sale contributed significantly to the downfall of Chicago-based lender Corus Bank, based on information from the Office of the Comptroller of the Currency which closed Corus and which appointed the Federal Deposit Insurance Corporation as the receiver.
According to the Comptroller’s Office, Corus is the major lender for several of the largest and costliest condo projects in Atlanta. Based on a report by Atlanta Business Chronicle, Corus had a total exposure of $533 million in real estate loans in Atlanta.
Corus has become the third biggest bank to fail in 2009 and the 90th bank to collapse nationwide this year. Banking regulators have been looking for private equity companies willing to buy the assets of Corus, which had been on bank regulators’ at-risk bank list in recent months because of its delinquent condo loans in Florida, Nevada, New York and California, including its exposure to Atlanta foreclosure homes for sale.
According to Atlanta property research firm Ackerman-Trinity Advisors, two of the biggest loans extended by Corus to condo developers in Atlanta were its $164-million loan for the 400-unit condo tower called The Atlantic and its $119-million loan for the 442-unit condo complex One River Place.
MB Financial, also based in Chicago, will acquire the deposits of Corus, whose assets totaled $7 billion when it failed. According to federal bank regulators, Corus provided loans primarily to condo developers, limiting its franchise value.
Based on Atlanta-based condo research company Haddow & Co., only 66 condos in Atlanta were sold in the second half last year and over 6,000 condo units remained unsold, equivalent to an unsold rate of more than 46 percent.
In addition, analysts point out to Corus’ loose lending requirements and unique business model as two of the key factors in its difficulties. Analysts said several Corus development loans in Atlanta were no-presale and non-recourse loans.
Under a no-presale agreement, developers do not need to show Corus proofs of pre-sales before providing the construction loans. Non-recourse loans meanwhile limit Corus only to the collaterals in case the developers default and cannot pursue the personal wealth of the failed developers.
Corus Bankshares Inc., the parent company of Corus, has also been struggling because more than 50 percent of its almost $4 billion loans to condo developers have defaulted as of April. It had about $500 million worth of foreclosed properties as of the end of June.
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