S&L; Crisis Comes Home to 300 North County Residents
The sprawling mobile home park nestled on a dusty, hot hillside between Warner Springs and Sunshine Summit in North County’s outback hardly seems the place to play out the workings of federal bureaucracy.
This is the kind of place where residents normally talk of bridge tournaments, new sewing classes in the clubhouse and cocktail parties--as in happy hour.
But now, talk is turning to tea parties--as in Boston.
It seems that headlines of a national crisis involving the solvency of savings and loans around the country suddenly have become more relevant for the 300 people living in this mobile home park alongside California 79. The bailout of financial institutions has hit home for them, quite literally, and some folks don’t like how the process works.
At issue is the disposal of this particular mobile home park, Warner Springs Mobilehome Estates, by a federal agency that took control of it from the financially beleaguered savings and loan that owned it.
“There’s good government, and there’s bad government, and this is a case of bad government,” growls 59-year-old Jerry Rucker, a retired commercial printer who, if he translates talk into action, may soon be distributing handbills promoting rebellion within the ranks.
The feds have become so enmeshed in their own bureaucracy, he says, that they’ve clearly chosen fiscal expediency at the expense of the small guy.
The park is owned by Los Angeles-based Brookside Savings & Loan, a four-branch thrift now under the conservatorship of the federal S&L; bailout agency, the Resolution Trust Corp.
The year-old federal agency is selling Brookside’s assets--including the mobile home park, which the thrift bought in 1985 as an investment that later soured.
The 15-year-old mobile home park is large enough for 300 mobile homes, but is only half filled, and about $500,000--if not twice that much--is needed just to bring its maintenance and repair agenda back on schedule, according to residents and appraisers.
When residents got wind of the feds taking control of the savings and loan--and the park--they talked of buying it for themselves. And, although about half of the park’s residents say they oppose that notion--at least, given the information they have--there was still enough interest among some residents to establish a committee to investigate the idea.
The feds, meanwhile, put the park up for sale on the open market, and mentioned it in a brochure sent to more than 500 real estate brokers nationwide, especially targeting those in Southern California.
The upshot: While the park residents were discussing buying the park for $5 million in a combination cash-and-terms deal, a private investment group offered to pay $3 million in cash to buy the place.
The feds told the park residents thanks but no thanks and accepted the $3-million cash deal. Escrow is expected to close midweek, and residents now wonder if they face rent increases from a new landlord for a park they might otherwise have owned themselves. Because the escrow is confidential, the park residents don’t know who the new owners will be.
And the residents, their attorney and a management company that hoped to help the park convert to resident ownership, all are wondering how they were left in the dust.
The Resolution Trust Corp. is “a monster running wild,” complained Rucker, who headed the committee looking into the park’s purchase. The federal government, he says, ran roughshod over the interests of the park residents. “If what happened to us is happening around the country, we’ve got a hell of a problem,” he said.
The group’s attorney--paid by donations from park residents--said he has recommended against pursuing the matter in court--not only because the issue may be moot with the close of escrow, but because of fear that these mostly retired folks on limited or fixed incomes could get tagged for the government’s legal tab in costly litigation.
Rucker and his compatriots contend that, because mobile home parks are officially considered a source of low- and moderate-income housing by the state of California, they should receive some sort of preferred treatment by the federal agency when it sells residential real estate.
After all, as federal program coordinator Muriel Watkins acknowledges in Washington, “Foreclosed real estate is a wonderful opportunity to provide low- and moderate-income residential property. On the one hand, we are charged with maximizing recovery (of S&L; assets) in order to minimize the losses in the S&L; crisis. But, on the other hand, there is a wide range of possible beneficiaries” to the bailout, including those in need of relatively cheap housing.
But Watkins, who oversees the agency’s affordable housing disposition program, adds in her next breath that the regional offices operate with great autonomy when it comes to disposing of real estate.
And Lona Jones, who is handling the Warner Springs matter in the agency’s regional office in Denver, says the local mobile home owners were out of the running in getting preferred treatment for no other reason than the fact that, although they owned their homes, they didn’t own the land beneath them. It’s the land, not the mobile homes, that the Resolution Trust Corp. controls.
If Brookside Savings & Loan owned the mobile homes as well as the property beneath them, and, if the thrift were in actual receivership--giving the federal government more leeway in how the property is disposed--then maybe the agency could have worked more closely with the park residents in the sale of the property, she said.
“But we only control the land, and the land itself doesn’t qualify for affordable housing,” Jones said.
Rucker and others say they are furious at Jones for her interpretation of affordable housing. Inexpensive mobile homes need the land to sit on to complete the housing equation. It’s all one and the same, they contend.
But, with Jones’ decision, the feds entertained sealed bids for the purchase of Warner Springs Mobilehome Estates. A private appraisal put the value of the park at $5 million. The agency conducted its own appraisal, but did not release the findings.
The agency received seven sealed bids, including the best one for $3 million from the investment group that subsequently qualified for the purchase. That offer, spokesman Kevin Shields said, exceeded the agency’s appraisal of the property’s worth.
The park residents could have bought the park if they were able to top that bid, and they didn’t, he said.
“There really isn’t an issue, as far as we’re concerned,” Shields said. “We wanted to sell this mobile home park to the tenants, and they said they wanted to buy it. We said, ‘That sounds great, let’s talk.’ And we’ve talked, and talked, and talked.
“They offered us a $5-million deal with terms for financing some of it over five to 15 years, and we ended up accepting the $3 million cash deal.”
Shields said his agency had reservations about whether the mobile home owners could pay off the terms, which made a straight cash deal more attractive.
Indeed, he noted, the residents had not even formed the requisite nonprofit organization for their proposed purchase--a process that could take months while the federal government is in a hurry to dispose of such assets.
Still, the feds had given the park residents a second chance. After rejecting the $5-million deal with terms, the trust corporation told the residents to come back with a cash offer--without telling them what the best deal was.
Jerry Fisher, president of Mitchell Management Co., which facilitates the sale of mobile home parks to park residents, responded by offering to beat any existing cash offer by $100,000 in cash.
The government turned down that offer, too.
“We had fears that they couldn’t put together the $5 million deal with terms, and we had fears that they couldn’t put together the cash deal, either,” Shields said.
Besides, he said, the rebound offer to beat the best offer by $100,000 wasn’t appropriate.
“This was a sealed-bid process. This was not an auction. When we went back to them, it was to tell them we needed a cash bid. We gave them every opportunity.”
During the discussions, the relationship between Fisher and the government soured--most notably when Fisher reportedly sent a letter to federal officials in Denver that included a four-letter-expletive description of how he felt about them.
“That lovely response,” Shields said sardonically of the Fisher sentiment, “showed us what kind of lovely people they are.”
Answered Fisher, “I will not acknowledge that I did that, but that’s what they deserved. Besides, who cares? I’m not out to try to make friends.”
Gerald Gibbs, a San Clemente attorney who worked with the park group, says the issue is all but over, although a lesson has been learned.
The Resolution Trust Corp., he said, “has chosen to dump an asset and, in this particular case, they proceeded to dump on a lot of lovely people who could have raised a lot more money for the United States, even if it wasn’t in 30 or 60 or 90 days.”
“The RTC could have made another $1 or $1.5 million, and why the RTC couldn’t have waited, that escapes me,” he said.
Some residents are sighing in relief that they’re not buying the park, saying they were concerned about how much they would have paid for their individual sites plus bringing the park’s maintenance up to snuff.
“This could have ended up destroying much of the life savings of the individuals owning the land,” said Gloria Bush, a psychologist and marriage and family counselor who lives at the park.
But Rucker says ownership of the park by the residents “would be a hell of a good investment” because of expectations that the park will eventually fill up, driving up the value of the individual lots.
Federal officials say the residents still may be able to buy the park, if they’re serious.
“They can buy the park from the new owners,” said Jones. “If Jerry (Fisher) can put some hot deal together, why not? Any investor is interested in making a profit, so if the residents can come together like Jerry says, then why don’t they still do that? They’ll have that opportunity.”
