Bank Foreclosed Threat on Colorado Affordable Housing Complex

by Peter Vernon on States

The 64-unit affordable apartment complex, Fox Run in Fraser is at risk of becoming a bank foreclosed housing complex due to nonpayment of over $3.75 million loan it took out from Colorado Housing and Finance Authority (CHFA).

According to Grand County records, the housing complex project owes a second loan totaling $218,000. CHFA chief financial officer Tom Hemmings said that the lender plans to file foreclosure on unpaid principal balance totaling to over $3.75 million.

Fox Run LLP loaned a total of $3.89 million from CHFA in 2003. The company used the loan to finance the apartment complex project, according to the CHFA documents. Hemmings explained that it is not the practice of CHFA to foreclose on multi-family apartment complexes.

But after working with the borrower for some time to come up with a viable solution to avoid foreclosure, the negotiation failed, added Hemmings.

The CHFA owns four multi-unit housing buildings in Denver. The agency was established by the Colorado Legislature in an effort to address the lack of affordable housing in the area. Since 1973, CHFA had been providing single family loans for qualified homebuyers as well as supporting apartment development projects for low-income and moderate-income residents of the state.

According to Hemmings, in the event that CHFA purchase Fox Run under the foreclosure process, not much change will take place in relation to the use of the housing complex, particularly in the affordable aspect of the project.

Details provided by Fox Run and Jim Sheehan, executive director of Grand County Housing Authority, showed that in 2007, the apartment complex had less than 2 percent vacancy rate.

However, problems with mold and the recession caused the downturn in the vacancy rate of the apartment complex. Sheehan said that occupancy rates in rental properties are down right now.

In November last year, the CHFA and the Colorado Division of Housing granted about $582,000 to the Fox Run project to make its account current. But the refinancing plan was undermined by the recession.

The housing complex also received financing through Low Income Housing tax credit, with Housing Outreach Fund VIII acting as limited partner providing $2.1 million cash equity for the project. But the limited partner is facing tax credit loss due to foreclosures.

The trustee’s sale of the Fox Run housing complex project is scheduled on September 18, 2009.