Wachovia Bank is seeking to recover $5 million from a Virginia Beach developer and a partner from a loan the bank made two years ago for a condominium development.
The suit, filed last week in the U.S. District Court for the Eastern District of Virginia in Norfolk, is the latest sign of trouble for the region's housing and condo market.
The suit names Richard S. "Dickie" Foster and James H. Monaco, as well as their project, The Lane at Wildwood in Virginia Beach.
Foster, a developer who has built in Virginia Beach and elsewhere for years, is best known recently for the roughly 2,000-acre Bay Creek resort in Cape Charles on the Eastern Shore.
The project in question is a condominium development just off of Wildwood Drive, near Sentara Virginia Beach General Hospital. Of the planned 20 units, 15 have been built and 10 of those have sold, said Kris Weaver, an agent with Long & Foster Real Estate Inc., which is marketing the development.
Prices for the three-bedroom condos start at about $415,000.
David H. Downs, a real estate and finance professor at Virginia Commonwealth University's School of Business in Richmond, said the turmoil in the credit market and the housing downturn will make things increasingly difficult for builders going forward.
"I think you're going to see a significant uptick in the number of builders having trouble," he said.
Wachovia extended its first loan of $6.8 million to the developers in May 2005, according to court filings. In August, the bank told the developers they were in default and demanded payment for the remainder of the loan.
Karen Crowley, an attorney hired by the developers to handle the claim, said her clients attempted to negotiate with the bank but that Wachovia "rejected all reasonable proposals."
Monaco and Foster did not return calls for comment. Wachovia's attorney, Michael A. Condyles, declined to comment on the suit.
Faced with mounting bad loans stemming from the housing crisis, Charlotte, N.C.-based Wachovia has agreed to be acquired by Wells Fargo & Co. of San Francisco.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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