Dream Homes Become Nightmares
Dick and Joan Whitehouse thought they had purchased their dream home in September 2000, when they entered into escrow on a four-bedroom, 4,100-square-foot house in La Vina Estates in Altadena.
But now, after a series of financial and legal twists and turns, they may very well have to bid once again on the property they thought was theirs--and they may be forced to pay handsomely for the passage of time.
Their predicament--and that of 25 other families--is part of the tangled tale of the La Vina development in Altadena at the edge of the Angeles National Forest. The 272-unit project took almost a decade just to commence.
Legal wranglings over the efficacy of such a massive project so close to the forest tied the development up in court. Even now, many area residents resent the property that seems to be carved into the Altadena hills.
The 26 homes, called La Vina Estates, were to be the last part of the overall La Vina project, and the most luxurious, selling for $700,000 to $800,000 each in a town in which the average home price is under $300,000.
But since last May, 25 of the La Vina Estates homes have sat unoccupied and incomplete. Twenty-five families have waited anxiously for almost a year now, since the builder, Compass Homes, began defaulting on loans and payments to suppliers. They have wondered whether they would ever be able to drive into their three-car garages, play in their music and media rooms, or entertain in kitchens equipped with granite countertops and cherry cabinets. Four of those families have given up and asked for their $10,000 deposits back.
The 26th family has been leasing their almost-complete house since late last year. “We technically aren’t even supposed to get water service,” said Steve Cooper, who lives in the house with wife, Kim, and children, Taylor and Michael, “because we don’t own the property. The power company has come by twice to turn off the power, because Compass didn’t pay their $13,000 bill.”
A report by the Los Angeles County Department of Consumer Affairs, requested earlier this month by the Board of Supervisors, says that Compass Homes and its subsidiary, La Vina Estates LLC, secured two loans against the 26 homes in La Vina Estates: one from Prism Builder Financial Group/Prism Mortgage for $10 million and another for $4 million from Lehman Ali, an affiliate of Lehman Brothers.
Lehman Ali began initiating foreclosure proceedings last November after Compass defaulted on its loan. But Lehman Ali lawyer Benzion J. Westreich said that Lehman Ali has been negotiating an agreement with Prism that would allow Lehman to complete the project under the auspices of a new limited liability corporation, Lehman Ali La Vina II.
On Thursday, many of the families showed up at the Norwalk Courthouse for a trustee sale of the property, in which other investors could have bid to take over Lehman Ali’s loan on the property. Although one private investor did show interest, no one was willing to match the required $2-million opening bid, and the property reverted to Lehman Ali.
For the homeowners, however, much remains unresolved. First, they wonder what will happen to the five-figure sums, most paid directly to the builder, for upgrades on their homes, such as marble flooring, covered balconies and other amenities.
Westreich said that although Lehman Ali is not obligated to refund any of the upgrade money, it plans to either credit or refund the money families have spent. Lehman Ali, he said, has made “an extraordinary offer. I don’t know of a lender that has offered up to the homeowners that if it takes over the project, the amounts they spent will be returned to them or credited.”
And although many families are willing to accept Lehman Ali’s assurances on their upgrade costs, they are wary of what will happen to the purchase price. Home prices in Altadena have increased 20% since January 2000.
“I know that the market is now higher than what it was when any of us purchased,” said Patrick Hanrahan, an attorney who leads the La Vina families. “Why should a stranger get our equity?”
Dick Whitehouse agreed. The chance to live near his grandchildren in a new house may indeed be only a dream. “I would like for them to sell it to us at the price we agreed upon,” he said. “If they add 30% or 40% to the purchase price, that’s not right.”
Lehman Ali has been unwilling to discuss what the purchase prices will be. The Department of Real Estate’s Crisis Response Team and the district attorney’s real estate fraud unit are investigating whether any action can be taken on behalf of the families.
In the meantime, Leah Dilbeck, a Pasadena real estate agent who is expecting her first child in June, does not know where she will be living when the baby is born. “It’s like you’re in the middle of a mini-series,” she said.
