Foreclosures and Residential Real Estate and Home Sales and Banking & Finance and Real Estate & Retail

Financial upheaval produced war stories galore

July 24, 2010

The foreclosure epidemic has left a wake of carnage in the Indianapolis area. Below are just a few high-end examples.

Back home again

South-side residential and commercial builder Glenn Brizendine had it all—a house that once appraised at $3 million, lots of big projects to his credit, a $30 million property pipeline.

Now he has virtually nothing. At age 56, he’s living with his parents. Actually, only one parent now. His father, Vernon Brizendine, the man Glenn Brizendine says taught him the value of quality work, died this month.

Along with the $30 million in property, Brizendine had accumulated $25 million in debt. When the construction market collapsed, people quit buying houses, businesses stopped leasing space, and the value of the property plummeted.

Brizendine’s brother, Gary, who had been an employee, went out on his own to build houses.

Hindsight has brought Brizendine new perspectives.

He got to spend lots of time with Vernon in his final months. He also said building the mansion, which the lender now is trying to sell for $1.4 million, was a mistake.

“It was just too big,” Brizendine recalled. “With four of us living there, we never saw each other. There just wasn’t that feeling of togetherness.”

Fiery protest

More than one builder felt burned by their lender when loans were called and houses built on speculation were lost.

But one builder actually retaliated with fire.

Scott Wynkoop, whose Indianapolis brokerage helps banks sell foreclosed properties, can’t shake the memory of the custom house in Hamilton County that had been stripped of, you name it—kitchen cabinets, bathroom fixtures, the pool pump.

Some of the equipment had been sold. The rest of it had been torched in the back yard. Workers filled dump trucks with half-burned debris.

“Somehow, [builders] think they’re getting back at the lender,” Wynkoop said.

The house, which had a mortgage balance of $1.7 million, eventually sold for about $500,000.

Gun-shy lenders

Huge mortgage losses have made lenders so jumpy that they’ve taken to instructing appraisers to build in further losses.

Kevin Kirkpatrick, president of Prudential Indiana Realty Group, said banks often instruct appraisers to base values not only on the past six months of comparable sales, but also by projecting what a house will be worth a year later. In other words, appraisers, who were under pressure before the financial crisis to grease sales by inflating values, now are being asked to figure a house will be worth even less in the future.

Appraisers feel obligated to add a discount of about 3 percent, which can be enough to persuade the seller to abandon the deal.

Some of the best offers are now torpedoed by low-ball appraisals.

“Putting deals together is the most trying part of our business anymore,” Kirkpatrick said.•

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