Lawyer's client list grows in Coast case
A Sarasota attorney is representing at least 100 clients who are ready to take on Coast Bank and the developer who left them saddled with mortgages on unfinished homes. Tannenbaum said he is planning a class action against CCI and the entities that packaged the real estate investment deals - including Seashore Resorts and American Mortgage Link.

Lawyer's client list grows in Coast case

BRIAN NEILL
Herald Staff Writer

SARASOTA - A Sarasota attorney is representing at least 100 clients who are ready to take on Coast Bank and the developer who left them saddled with mortgages on unfinished homes.

Alan Tannenbaum, of the Levin, Tannenbaum, Band and Gates law firm, said he postponed talking with Coast Bank officials until he had "a critical mass of clients."

"I've heard rumors that some lawyers had approached the bank already, maybe with three or five or 10 clients, and their entres were rejected," Tannenbaum said. "You're at a little different negotiating position when you walk in indicating that you represent 100 borrowers. We wanted to wait until we had a significant number of clients under retainer to get their attention. So that entre is starting now."

A total of 482 loans for homes in Sarasota and Charlotte counties were placed in jeopardy in January when St. Petersburg-based Construction Compliance Inc. announced it couldn't finish the houses because of financial difficulties.

The loans to homebuyers totaled $110 million, of which roughly $66 million has been disbursed. As of late January, roughly half of the 482 homes still amounted to empty lots.

Tannenbaum said he is planning a class action against CCI and the entities that packaged the real estate investment deals - including Seashore Resorts and American Mortgage Link.

"What is susceptible to class action is what I call the investment fraud, and that is a potential action against all of the parties who sold this package," Tannenbaum said. "It goes to how the deals were sold, what representations were made, what disclaimers were given and who was licensed or not licensed to sell that package."

Tannenbaum said he also planned to represent the borrowers individually in pursuing forgiveness on the Coast Bank loans.

"The action against the bank would be to rescind those mortgages on the basis of their being fraudulent," Tannenbaum said, "and also alleging breach of fiduciary duty by the bank in how they administered and had underwritten those loans."

Tannenbaum acknowledged that might be hard for Coast Bank to accept, but he's hoping the bank will be flexible.

"Where there might be a compromise is having the bank modify those mortgages to bring them into balance with the value that exists," Tannenbaum said.

Tannenbaum said Coast Bank has made only modest efforts to work with the borrowers he's representing.

"From our perspective, the more flexible Coast is as to working out their individual borrowers' problems, the less likely they would find themselves as a participant in the class action," Tannenbaum said. "Coast is the one that has the opportunity to act early on to turn what's a growing group of agitated borrowers into banking clients who are believing that their bank has struck them a fair deal."

Tramm Hudson, an adviser and spokesman for Coast Bank, said he has had no conversations with Tannenbaum and couldn't comment on the attorney's assertions about the bank's dealings with borrowers.

"I can tell you that we have contacted all the borrowers on two different occasions and offered them different options to work through these matters," Hudson said. "The crux of this is the builder ceased operations and the borrower has certain decisions that they need to make. It's really between the borrower and his builder and the bank is willing to work in any way to help solve those problems."

Though the concentration of loans were greatest with Coast Bank, Tannenbaum said some of his clients also financed their CCI-built homes through Ohio-headquartered National City Bank and Atlanta-based SunTrust.

"National City had dozens. I think SunTrust had less," Tannenbaum said. "What I heard from a former employee of CCI was that Coast was getting a little bit nervous about having so many loans with CCI, especially at the later stages. That prompted CCI to start sending some business over to National City and SunTrust."

Kelly Wagner Amen, a spokeswoman for National City, said the bank's mortgage section had a very small concentration of loans made to borrowers whose homes were contracted to be built by CCI, though she didn't have a specific number.

Susie Findell, a spokeswoman with SunTrust, said the bank had no comment.

"We don't talk about customers' business, especially if it's something that's going to go to court," Findell said.

Coast Bank is still working with regulators and conducting its own audit of the loans, Hudson said.

He did not have a time frame for when that analysis would be complete.

"This was not created overnight and it will not be solved overnight," Hudson said. "There are some very complex issues that need to be thought through by the borrowers in terms of how they want to proceed. The builder has ceased operations. They (borrowers) need to determine how they want to proceed with construction and if they want to hire a new builder. And the bank is ready to help them proceed."

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