A new article has just been released by the South Florida Business Journal showing Bank United’s “Condo Blacklist.” These are the high risk condo properties that this bank will not be issuing loans to now and possible ever. Many of Miami Dade’s condo properties and homes witnessed a 25 percent increase in their overall value year over year from 2003 to 2005. By 1Q 2006, things began to change and now a 25% to 40% depreciation has occurred. And here we are now limping out of 2007 with the worst yet to come apparently in 2008 for the mainland of Miami Dade including Downtown Miami, Brickell condos and the Miami River. Property values continue to crash in these areas, foreclosures are at an all time high and now comes word that now over 100 condos in the Downtown Miami area are being blacklisted. Interested buyers looking for mortgages to buy units in Miami’s Opera Tower, Everglades on the Bay or Four Ambassadors shouldn’t bother approaching Bank United. The Miami based bank has included them on a list of 191 condo projects it will not be writing loans for.The Business Journal obtained a list of “non permissible” projects used internally at Bank United (BKUNA) and updated as of Jan. 14. Most of the forbidden properties were in Downtown Miami and were added at the last update. It wasn’t clear who at the bank wrote the list, but the author stated a reason for almost every project declared off limits.
Declining market value was the biggest culprit, followed by high investor concentration as much as 70 percent in some cases. Bank United’s decision is also based on numerous foreclosures, delinquent condo association dues and structural based litigation. Bank United spokeswoman Melissa Gracey said the list is based a similar guidelines used by Fannie Mae and Freddie Mac. The key point of this mess, not even mentioned in the article, is the domino effect. Anyone who purchased a unit and has closed on it is now trapped into what may occur. There is no one to sell to because no financing is available so speculators are left on the sidelines with heavy carrying costs. By publicly posting the exclusion list, other lenders are sure to follow suit. It will become difficult if not impossible to purchase a unit in any of those 119 projects. The implication is a substantial number of those projects will fail. Whatever banks financed those towers are going to end up owning them. Those who have a placed a down payment on a unit but have not yet closed may wish to seek legal advice to see if the shutdown of bank financing is somehow material to the purchase agreement. Some no doubt will simply decide to walk away regardless of the answer. Bank United just started a domino effect. The dominoes will keep falling until they reach the banks lending money to these projects. Undercapitalized banks funding these projects may likely fail.
Bank United’s Non Permissible Condo List (Miami’s condo heavy hitters in alphabetical order) 50 Biscayne in Miami, 600 Biscayne, 1650 Biscayne, 900 Biscayne Bay, 500 Brickell, 1390 Brickell Key, 1600 Club, Asia, Atlantis Condo, Axis on Brickell, Bay Lofts, Biscayne Tower, Blue, Brickell Bay Club, Brickell Bay Tower, Brickell on the River, Brickell Place, Brickell Station, Bristol Tower, Capital at Brickell, Carbonell, Cima Condo, Cite, City 24, Club at Brickell, Commodore Bay, Costa Bella, Courts Brickell Key, Courvoisier Courts, Cynergi, Downtown Lofts, Emerald at Brickell, Epic Dupont, Espirito Santo Plaza, Everglades on the Bay, Filling Station Lofts, Fortune House, Four Ambassadors, Four Seasons Hotel & Tower, Golden Bay Club, Icon on Brickell, Infinity at Brickell, IOS on the Bay, Ivy, Jade Residences at Brickell, Latitude on the River, Marina Blue, Marquis Miami, Mary Brickell Village, Met 1, Metropolitan, Midtown Miami, Mint at Riverfront, Neo River Lofts, Neo Vertica, Oasis on the Bay, One Miami, One Tequesta Point, Opera Tower, Paramount on the Bay, Paramount Park, Parc Lofts, Park Place, Platinum, Plaza on Brickell, Point at Brickell, Quantum on the Bay, River Oaks, Sail Boat Cay, Seacoast Towers, Skyline Mary Brickell Village, Skyline on Brickell, Soleil Miami, Solaris Brickell Bay, Summit Brickell, Star Lofts, Sunset Harbour, Ten Museum Park, The Carriage House, The Jade Condominium, The Mark on Brickell Bay, Three Tequesta Point, Two Tequesta Point, Uptown Lofts, Villa Brickell, Villa Magna, Villa Regina, Vue at Brickell, Wind by Neo, Yorker. Brought to you by the South Florida Business Journal
Whew, what a list! Many on the list were outside of Miami Dade (included Las Vegas) and we find the majority blacklisted are located in Downtown Miami including Brickell and the Miami River. Notice something crucial from above…Banks have faith in Oceanfront Condos of Miami Dade including Sunny Isles real estate, Bal Harbour real estate, Miami Beach FL real estate and South Beach FL real estate! I’m reaffirmed that the demand is and always will be based on location, location, location. ie) Oceanfront Luxury Condos where there is limited space to build and continued demand. Through increased tourism (currently the Miami Boat Show), National and International buyer’s seeking the Miami oceanfront Deals and Low interest rates and even in this great Buyers market. You’re invited to leave any thoughts, opinions and comment below.