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					Builder Loans in Bank
Failures: A Survival Guide
Tuesday, June 29, 2:00 – 3:00 pm, EDT

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      Builder Loans in Bank Failures:
       A Survival Guide
     Michael Sivage (moderator)
     President, Sivage Homes, Albuquerque, NM

Michael Sivage is the sole owner and manager of Sivage Community Development in Albuquerque, New Mexico as well as owner and CEO
of various other entities, including Michael Sivage Homes & Communities in San Antonio, Texas. Mr. Sivage actively builds and develops in
both Albuquerque, New Mexico and San Antonio, Texas today. The New Mexico company specializes in land development and higher end
luxury product with an average sales price of slightly over $500,000. Since Sivage's entrance into San Antonio in June of 2005 the company
has built and closed over 1,500 homes in the area. Mr. Sivage was formerly President and CEO of Sivage-Thomas Homes from 1991 to 2003.
Mr. Sivage and his family sold their interests in Sivage-Thomas Homes to Pulte Homes on July 1, 2003. During Mr. Sivage's tenure with
Sivage-Thomas Homes, he was responsible for building over 8,500 homes in Arizona and New Mexico for revenue exceeding $1 billion.

During his career Sivage has lead the acquisition of two homebuilding companies and the sale of Sivage-Thomas. Mr. Sivage has devoted his
career to the home building industry. From chairing the City of Albuquerque Affordable Housing Committee to serving as a member of the
Governor's Task Force on Mortgage Lending, Mr. Sivage is an active participant in the industry at the local, state and national level. He is a
Past President of the Home Builders Association of Central New Mexico and the New Mexico Home Builders Association, as well as a Life
Director for the National Association of Home Builders. He has served in many capacities with each of these organizations and continues to
do so today. In acknowledgment of his achievements he was named America's Best Builder in 1999 by Builder Magazine. He was also
chosen as Builder Member of the year in 1991 and 1998 by the HBACNM and NMHBA respectively and he was inducted into the former's
hall of fame in 1996. Mr. Sivage also serves as a Director for the Bank of Albuquerque and is the Vice Chairman of the New Mexico
Mortgage Finance Authority.
Builder Loans in Bank Failures:
A Survival Guide

•Almost 250 bank failures since 2008.
•More than 80 so far in 2010.
•FDIC reports nearly 800 banks on its problem list.

  What do you need to do if your bank fails?

                            “FDIC: „Problem Banks‟ at 775”, May 21, 2010
      Builder Loans in Bank Failures:
       A Survival Guide
     James Edward Horne (Panelist)
     President & CEO, Capitol Realty Advisors Inc. and Wilshire
     Homes, Austin, TX
Currently Mr. Horne is the President and CEO of Capitol Realty Advisors, Inc. and Wilshire Homes LP.

Wilshire Homes, LP is a homebuilding company building homes in the Texas focusing on the Austin and San Antonio markets. Wilshire
Homes has been operating in the Texas markets since the early 1990’s. The customers are primarily first and second time move up buyers
with a desire to have the homes customized to their individual needs. Wilshire is a values driven company that operates to a set of core
values (Honesty, Integrity, Trust and Respect, Excellence and Continuance Improvement) that sets the company apart in the homebuilding

Capitol Realty Advisors, Inc. began in 1986 and specializes in the management of residential developments in the Austin, San Antonio, and
Houston markets. Capitol Realty Advisors is active in the brokerage of land in the Texas markets.
Mr. Horne, as a licensed Real Estate Broker in Texas, has been active in the management and sale of real estate in Texas since 1976. He has
development and managed numerous subdivisions, apartment complexes, and single family homes over the years through out Texas,
Arizona, and Georgia.

Mr. Horne is a native Texan who grew up in Pflugerville, Texas. He is a graduate of Texas Lutheran College in Seguin, Texas. He has been
involved in Christian education efforts in central Texas for many years. He was founding chairman of Trinity Episcopal School in Austin. He is
currently on the board of Hyde Park Baptist School, Inc. Effecting children’s lives thru the knowledge and love of Christ thru Christian
education has been a passion of his for many years. He is also an active member of Hyde Park Baptist Church where he serves on their
Strategic Futures Group implementing a strategic plan for the growth of Hyde Park Baptist Church.
      Builder Loans in Bank Failures:
       A Survival Guide
     D Rand Roan (Panelist)
     Principal, Apogee Partners LLC, Plano TX

Rand is a Principal and founding member of Apogee Partners, LLC and Owner of Three Pointe Land & Title Company, LLC. Rand’s primary
responsibility with Apogee Partners is negotiating settlements with banks and the FDIC on behalf of Apogee clients. Rand’s previous
experience includes over 20 years in various management level positions with the Federal Deposit Insurance Corporation. He began his
career working as a liquidator of the assets of failed banks in receivership. He was promoted to positions including, Department Head of
Asset Marketing and Assistant to the Director of National Field Operations. He was also selected to serve on task forces for asset marketing
delegations and sale strategies for the FDIC. Rand has been actively working with the NAHB on matters relating to debt settlement.
Rand has been a speaker on numerous occasions for the NAHB at the local and national levels.

About Apogee Partners, LLC
Apogee Partners, LLC is presently assisting a number of homebuilders and developers nationwide in their efforts to survive in this current
economic environment. In addition to our debt restructure services, we also assist our clients in their search for private funding. To date,
the vast majority of our client base has resulted from referrals from former clients. We think that speaks volumes. Each and every case is
assigned directly to a Principal of Apogee Partners. Your livelihood is too important to be put in the hands of a junior associate. Apogee
Partners, LLC is managed by Maggie Marotta, CPA. Maggie has over 20 years of banking and accounting experience. Robert Clark Carruth,
Esquire is Apogee’s in-house legal counsel. The combined experience of our team of seasoned professionals and our positive relationship
with lenders gives our clients an opportunity to succeed. For more information, please call 1-972-985-4145.
Builder Loans in Bank Failures:
A Survival Guide

Today‟s program‟s goals:

1.Provide information on FDIC receivership activities and how they may
affect you if your bank fails.

2.Provide insight into the financial and marketing tools to garner interest
from new funding sources for your projects.

3.Provide an example of a builder who recently worked through the FDIC
maze and successfully restructured his loans.
Builder Loans in Bank Failures:
A Survival Guide

Important terms and definitions:
Assuming Bank – the bank taking control of the assets and or liabilities of the
failed bank.
Federal Deposit Insurance Corporation (FDIC) –an independent federal
government agency that preserves and promotes public confidence in the U.S.
financial system by insuring bank and thrift deposits up to $250,000; by
identifying, monitoring and addressing risks to the deposit insurance funds; and
by limiting the effect on the economy and the financial system when a bank or
thrift institution fails.
Insolvency – when liabilities, other than to stockholders, exceed assets; under
such a condition the bank would be unable, even after all assets had been
liquidated, to pay note holders and depositors par on their claims.
Loss Share Agreement – specifies the amount of the losses on the assets
acquired by the assuming bank that the FDIC will reimburse.
Builder Loans in Bank Failures:
A Survival Guide
Important terms and definitions continued:

Purchase and Acquisition Agreement – according to the FDIC, this is the preferred
and most common method for a healthy bank to take over a failed bank. The
healthy bank assumes the insured deposits of the failed bank. Insured depositors
of the failed bank immediately become depositors of the assuming bank and have
access to their insured funds. The assuming bank may also purchase loans and
other assets of the failed bank.

Receivership - when an insured institution fails, the FDIC is ordinarily appointed
receiver. In that capacity, it assumes responsibility for efficiently recovering the
maximum amount possible from the disposition of the receivership‟s assets and
the pursuit of the receivership‟s claims. Funds collected from the sale of assets
and the disposition of valid claims are distributed to the receivership‟s creditors in
accordance with the priorities set by law. Many times an assuming bank will take
over the failed bank the weekend after the FDIC places the failed bank into
receivership on a Friday afternoon.
Builder Loans in Bank Failures:
A Survival Guide

First things first:
       What happens when a bank is declared insolvent?

•Once the bank is declared insolvent by its primary regulator, the
FDIC is appointed receiver.
•In this capacity, the FDIC is charged with managing the assets of
the failed bank.
•FDIC‟s focus is to maximize recovery back to the bank insurance
Builder Loans in Bank Failures:
A Survival Guide

First things first:
   What happens when a bank is declared insolvent? Cont.

If an assuming bank is found:
•your note may be part of a loss share agreement;
•the new bank owns your note and is in charge of servicing it; and,
•the FDIC shares in losses the new bank may incur during the resolution of your
If your note is not part of the transaction with the assuming bank:
•the FDIC‟s Division of Resolutions & Receivership is charged with the servicing
and ultimate liquidation of your note.
Builder Loans in Bank Failures:
A Survival Guide

        What do you need to do if your bank closes?
•Immediately find out who owns your note and who is responsible
for servicing.
•If there is an assuming bank, immediately contact its customer
service department.
•Look up the FDIC‟s closed bank list on for contact
information, updates on bank personnel, and FDIC post closing
asset managers.
Builder Loans in Bank Failures:
A Survival Guide

   Once you find out who owns your note what do you do?
If the FDIC receiver retains your note:
•FDIC may choose to settle your debt, but has no obligation to settle;
•If the settlement presents a liquidation method maximizing recovery, it may be
•Time is critical, and it is an ongoing process; and,
•Earnest money deposit from the borrower is required.
   Builder Loans in Bank Failures:
   A Survival Guide
              What makes an FDIC settlement possible?
•The FDIC is a bureaucracy with rules and procedures to be followed.
•Contact your account officer immediately.
•Inquire about appraisals.
•Get your financial records in order.
•Communicate with your money people.
•Seek professional advice; consider advisors with FDIC background and
•To the extent possible, know what the FDIC needs to settle to be ready going into
the process.
•Demonstrate why taking the discount will be more beneficial to the FDIC Fund than
other alternatives (i.e. bulk sale).
Builder Loans in Bank Failures:
A Survival Guide

      What can you do to secure funds for restructuring?
•Contact and speak with every bank connection you have, every private equity
group you know.
•Don‟t get too enamored with your projects.
•Your goals should be to get your project debt structure to an acceptable level,
reduce liabilities if you‟re a guarantor, and to stay in business.
•You should consider contacting the NAHB for guidance
•Be cautious about seeking help from local/state Congress members; this
should be a last resort when all other options have been pursued.
Builder Loans in Bank Failures:
A Survival Guide
  What do you need to know about loss share agreements?
•Bank purchase and assumption agreements seem to be typically negotiated
with the Franchise Marketing Group at the FDIC.
•Regardless, each and every purchase and assumption agreement is different.
•Many of the relevant documents are not public record, so is prudent to gain
details of the assuming bank‟s interpretation of the loss share parameters when
•As a borrower, your financial reporting and appraisal due diligence is similar to
the process of working with the FDIC.
•Each assuming back has its own data requirements.
•Bear in mind that the FDIC does not own the note, the bank does.
•The FDIC remains involved with the assuming bank to cover FDIC‟s agreed
percentage of the loss the bank incurs upon resolution of the notes.
Builder Loans in Bank Failures:
A Survival Guide

  What do you need to know about loss share agreements? Cont.

•The trend has been for assuming banks to be very conservative in liquidation
efforts on the loss share pool.
•In cases of deficiency balances, guarantors are being pursued.
•The assuming banks don‟t want to risk losing the loss claim from the FDIC.
•Appraisals are important.
Builder Loans in Bank Failures:
A Survival Guide

                       Alternative Funding Sources
•   Know that if the bank won‟t discount the note relative to the current
    appraisal, a take-out is not likely.
•   There are a lot of distressed real estate opportunities for alternative sources.
•   Don‟t be surprised to hear private sources wanting a 20 to 25% internal rate
    of return for a two to three year period.
•   Be creative in your deal structures.
•   Be open to talking with numerous sources.
•   May have better success with private funding sources that have a real estate
    Builder Loans in Bank Failures:
    A Survival Guide
                          Identify a Troubled Bank
•   Communicate regularly with your banker.
•   Ask in advance about upcoming renewals.
•   Watch for loan officer hesitation when inquiring about future loans.
•   Learn as much about your bank as possible- upcoming bank examinations.
•   Learn the banks used by borrowers with loans gone bad.
•   Keep your ears open for the word on the street.
•   Periodically check the FDIC‟s monthly report on banks with enforcement
•   Finally – Keep on top of alternative funding opportunities in case a Friday
    afternoon draw is not available.
Builder Loans in Bank Failures:
A Survival Guide

                         Program Take Aways
Carefully monitor your lender‟s condition.
In the event of your bank failing:
•   begin communication with the bank as soon as possible;
•   don‟t anticipate a future relationship with this bank or funding from the FDIC;
•   don‟t wait to begin your search for new capital resources;
•   be open to alternative financing options;
•   utilize outside experts; and,
•   demonstrate why taking the discount will be more beneficial to the FDIC Fund
    than other alternatives – such as a bulk sale.

                 Question and Answer

To submit a question, use the “Ask Staff A Question”
menu item in the lower right-hand part of your screen.
                  For more information

•NAHB Housing Finance Committee

•AD&C Resources                           


                         •NAHB Housing Finance Staff

         •David Ledford,, (800) 368-5242, x8265

               •Chellie Hamecs,, x8425

                  •Stephen Linville,, x8597

                  •Kimberly Moore,, x8529


For All Media & Sales Enquiries

        Call or Email
        Amitesh Sinha

      (703) 471-3964, x241

Additional NAHB webinar information available at



     Mary Knowles, (800) 368-5242, x8057

         Builder Guide to Appraisals:
Obtaining Accurate Valuations on New Homes

         August 4, 2010, 2:00 to 3:00 p.m., EDT

  For information about this program, send an email to
Thank You


Description: San Antonio Texas Thomas Real Estate document sample