CAPE CORAL, Fla. — The NCUA watchdogs may be trying to salvage both Norlarco Credit Union in Fort Collins, Colo. and Huron River Area Credit Union in Ann Arbor, Mich., but potential losses from construction loans both made to build homes here are increasing as defaults soar. And the black eye from negative PR the credit union movement may get from the many lawsuits filed that involve the CUs may make survival difficult. Finding a CU willing to merge with either one may be just as problematic.
Both CUs are being sued by people claiming they were defrauded by First Homebuilders, which is owned by Hovnanian Enterprises, of Red Bank, N.J., and also names several other lenders and real-estate agencies, including the brokerage firm of D'Alessandro & Woodyard.
The down real estate market is blamed by all for their woes, as they claim the southwest Florida market may be the worst in the country. Reports cite a peak in December 2005 for a single-family home with a median price of $322,300. In July, the price was $246,100, a drop of almost 24%.
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