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Condominium Condemned for code violations and shoddy construction
Wednesday, 30 June 2010

Builder Fazio reportedly owes millions
The Norristown developer who built a 26-unit condominium building on Sandy Street that was condemned last month for numerous construction problems has had financial problems dating back to at least 2007.  R. Bruce Fazio owes $2,450,000 to the St. Edmond’s Federal Savings Bank for the unpaid balance of a revolving construction loan granted to finance construction of 770 Sandy St.  Norristown officials condemned the four-story building for numerous code violations, fire safety problems and alleged shoddy construction. Eight condominium owners and 15 renters were evicted by code enforcement after a contentious hearing in Montgomery County Common Pleas Court.

Builder Fazio reportedly owes millions
By Carl Rotenberg
For Montgomery Life

NORRISTOWN — The Norristown developer who built a 26-unit condominium building on Sandy Street that was condemned last month for numerous construction problems has had financial problems dating back to at least 2007.

R. Bruce Fazio owes $2,450,000 to the St. Edmond’s Federal Savings Bank for the unpaid balance of a revolving construction loan granted to finance construction of 770 Sandy St.

Norristown officials condemned the four-story building for numerous code violations, fire safety problems and alleged shoddy construction. Eight condominium owners and 15 renters were evicted by code enforcement after a contentious hearing in Montgomery County Common Pleas Court.

Mark Kearney, an attorney for St. Edmond’s Federal Savings Bank, said the bank had gotten a Montgomery County Common Pleas Court judgment in February 2010 that both Fazio and his realty company owed the bank $2,450,000 on the construction loan.

Banks routinely require commercial borrowers to agree, in advance, to a “confession of judgment” if they default on a loan during the payback period.

“We have to send him (Fazio) questions and discovery in court about his assets and attempt to collect against his assets,” Kearney said. “That is a very lengthy process.

“The recorder of deeds has records that have millions of dollars of debt by Fazio across many properties,” Kearney continued. “The banks and the property owners are caught in the middle of it.”

Fazio did not return telephone calls last week seeking comment.

“The loans made by the banks were real estate loans based upon the appraised value of the real estate,” said Kenneth J. Roeberg, Fazio’s attorney. “Unfortunately, an unprecedented turn of the real estate market caused the loan-to-property-value ratios to go under water.”

A property is said to be “underwater” when the real monetary value of the property drops below the mortgage total owed on the real estate.

“The condominium market dried up completely, which caused the Sandy Street property to go from very successful to problematic,” Roeberg said. “Had the real estate market not turned, the condos would have continued to sell, the other properties would have sold and the financial problems that ensued would have been averted.”

“Unfortunately, this is a scenario that has plagued small builders all over the country,” Roeberg said.

Allegiance Bank of North America sued Fazio on June 17, 2009 for failure to make monthly payments of $4,031 on a $547,500 loan that started in June 2008. Fazio allegedly failed to make full payments in April, May and June 2009, according to the September 2009 lawsuit filed in Montgomery County Common Pleas Court.

The bank asked for a court judgment for “$615,861, plus interest in the amount of $93 per day from Sept. 15, 2009 and the costs of the judgment.”

Allegiance Bank also sued Fazio on June 15, 2009 for failure to make monthly payments of $804 on a $105,000 loan that started Jan. 29, 2008. Fazio allegedly failed to make payments in May and June 2009, according to a March 2009 lawsuit filed in Common Pleas Court.

The bank asked for a court judgment for “$121,367 plus interest in the amount of $19 per day from Sept. 15, 2009 and the costs of the judgment.”

An Allegiance Bank official in Lower Merion and three attorneys at Obermayer Rebmann Maxwell & Hippel in Philadelphia, the law firm handling Allegiance’s lawsuits against Fazio, did not return numerous telephone calls last week seeking comment.

Fazio owes more than $3,187,228 for the three large, unpaid bank loans because accrued interest and costs are added each day they are not repaid.
http://www.montgomerynews.com/articles/2010/06/15/montgomery_life/news/doc4c1588c911c7a163630807.txt

 
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