Miami’s Wind by Neo condo in foreclosure

The developer of Wind by Neo, a 42-story, 498 unit condo along the Miami River is facing a foreclosure lawsuit from Wachovia Bank.

The condo by Miami-based Neo Epoch was to be the first of six towers in a massive development on 13.5 acres at the intersection of Miami Avenue and the north bank of the Miami River. Instead, it’s one of the largest completed condos yet to face a foreclosure lawsuit.

In February, the Business Journal reported that the project was one of 191 that BankUnited would not write mortgages for – a result of declining market value and high investor concentration.

On Nov. 26, Wachovia Bank filed a notice of foreclosure against Neo Epoch 2; company officers Lissette Calderon, Maria Calderon and Frank Guerra; and contractors who held liens on the project. The document exempted the 214 residential units and four commercial units the developer sold from the foreclosure action.

Lissette Calderon, CEO of Neo Holdings of Florida, dismissed the action saying that Wachovia filed the foreclosure as a formality in preparation for its expected merger with Wells Fargo. Calderon is the director of Wachovia's community development advisory board.

"With Wachovia's cooperation, Wind has operated and continues to operate as a first rate building with no interruption in service whatsoever," Calderon said in an e-mail. "Just this week, after the foreclosure action was filed, we have closed 11 units and have confirmed over 60 units to close in the next 45 days."

In 2005, Wachovia granted Neo Epoch 2 a $115 million mortgage, with future advances possibly bringing it as high as $230 million, to build Wind by Neo.

Neo Epoch 1, a related company that owns a nearby property along the Miami River, holds a $22.8 million mortgage with Wachovia and a $1.4 million mortgage from Miami-based Ocean Bank. However, Neo Epoch 1 was not named in the foreclosure lawsuit.

The first sale in Wind by Neo closed in March. Closings started at a brisk pace, but trickled to a crawl. Neo Epoch issued a total of eight deeds in October and November, according to county records.

The lawsuit complaint, filed by Miami attorney W. Wyndham Geyer Jr., said Neo Epoch 2 owes Wachovia and its partner banks $46.6 million. HSBC Bank, Mercantil Commercebank of Coral Gables, Mercantile Bank and Comerica Bank participated on the mortgage with Wachovia, the suit says. The lawsuit also calls for a receiver to be appointed to take control of Wind by Neo.

Peter Zalewski, who tracks downtown Miami condo sales as CEO of Condo Vultures Realty, said he's shocked that Wachovia filed foreclosure against Wind by Neo, which he said had a good sales pace. The building was closing about 23 units a month since March, he said. Usually, it takes a developer a year to sell out a 400-to-500-unit building, Zalewski said. Wachovia gave Wind by Neo nine months.

"It seems to me that Wind is getting a bad shake," Zalewski said. "Wind got caught in a situation where they are being made a sacrificial lamb."

Original Story - BizJournals