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Defaults, foreclosures grow in not-so-rosy Wasco

By GRETCHEN WENNER, Californian staff writer
e-mail: gwenner@bakersfield.com | Monday, Jul 7 2008 6:35 PM

Last Updated: Tuesday, Jul 8 2008 9:08 AM

Defaulted residential projects continue to pile up in Wasco, the rose-growing town of about 24,300, located 25 miles northwest of Bakersfield.

Wasco Village LLC, a 380-unit development planned for the southeast corner of Highway 46 and Magnolia Avenue, defaulted on a $3.2 million loan July 3, county records show. As of July 1, more than $3.36 million was owed to lender United Commercial Bank, the default notice indicated.

The filing brings Wasco’s tally of defaulted and foreclosed sites to at least nine. All were projects of out-of-town developers.

Last week’s delinquency notice, the first legal step in a possible foreclosure, was the second for Wasco Village.

In May, lender Central Pacific Bank filed a default notice for $1.2 million borrowed against the site in 2007. Most of the principal was still owed on that loan, the notice showed.

In March, the Kern County Treasurer-Tax Collector’s office recorded three property tax liens against the project totaling about $21,780.

Developer John J. Gates of Irvine-based Triumph Cos. Inc. is behind the Wasco Village project, signature pages of public documents show. Gates did not return a message seeking comment Monday afternoon.

Another Gates project in Wasco, the partially constructed Poplar Pointe LLC community at Filburn and Poplar avenues, was foreclosed on in May.

Poplar Pointe shows the complexity communities, lenders, construction companies and some buyers will face as the number of failed developments mushroom in Kern.

Fourteen of the tract’s 39 units were finished before it slipped into default and the site was locked away behind gated walls.

The finished homes were sold in an online auction late last year — after the developer defaulted.

But buyers are in limbo while the bank that repossessed the property figures out what to do, said the spokeswoman for the auction house.

“Most of (the buyers) have chosen to keep their deposits with us because they would still like to purchase the home and, like us, are awaiting further communication from the bank,” said Ashley Carvalho, of the LFC Group of Cos. in Newport Beach, in an e-mail. The buyers can ask for their deposits back at any time, she added.

When asked what the bank planned to do with the property, a spokeswoman for Indymac Bank, Katie McFadzean, said in an e-mail: “Indymac’s company policy states that it cannot comment on specific properties or transactions.” A senator has now begun to wonder about Indymac’s solvency, The Wall Street Journal recently reported.

Liens and lawsuits from contractors and subcontractors who worked at the site and claim they weren’t fully paid have also clouded titles at Poplar Pointe.

In the spring, meanwhile, General Electric Co.’s appliance division sued to get back refrigerators, dishwashers and other appliances installed in the finished homes. A hearing is set for later this month.

How long it takes — and how many legal fees are rung up along the way — to get Poplar Pointe’s 14 homes and 25 remaining lots back into circulation provide a roadmap for other partially built sites around Kern mired in unpaid bills and legal troubles.

In Wasco, a smallish city with rose production and a state prison as the main economic drivers, the problem seems especially concentrated.

In addition to the two Gates projects, other faltering developments include:

• Three defaulted sites of Reynen & Bardis Communities Inc., the Sacramento homebuilder. One site is partially built with a half-dozen families living in it.

• Two defaults on the Climbing Rose Estates project of developer Kemp Land Co. of Contra Costa County. Some infrastructure is finished and model homes in place.

• The Las Rosas project at Palm and Filburn of Heller Development Co. in Tarzana defaulted in May. About a dozen families have bought some of the 60 or so finished homes in the tract.

• Stockton developer Kent Hoggan lost two Eagle Meadows of Wasco sites to foreclosure this year; neither agricultural patch had been developed.