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With most banks scared to lend money as federal officials breath down their necks, what are business owners to do when their mortgages start to mature?
Successful businessman Harvey Vengroff, one of the largest owners of apartments in Sarasota and Manatee counties, is facing the dilemma. Vengroff, who has a total of nearly $100 million worth of loans, has some that have reached maturity with virtually no prospects for another bank to take them on.
“I'm a member of the landlords association and this is hitting a lot of them,” Vengroff says. “Almost everybody there said they had stopped paying their [property] taxes for the year because it was cheaper money, going into delinquency, than they could get from a bank. It certainly would be nice if we could get a little understanding from the banks, especially when they are getting money from the government for 0%.”
The current maturity issue is only the latest mortgage-related problem facing Vengroff. He recently purchased his $2.5-million mortgage for the Gardenwood Apartments in Bradenton from the FDIC after it closed lender Freedom Bank. The upshot for Vengroff was he bought back the debt for 63% of its worth.
“It's a great deal as long as you have the capital to do it,” Vengroff says. “It was really stupid though. Instead of the FDIC letting us buy it directly for a 10% discount they put it up for auction, were it went for a lot less.” To Vengroff.
Vengroff says he had roughly $14 million worth of mortgages with banks that no longer exist.
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