Home -> Law Blog Directory -> Real Estate & Property Law Blogs -> Florida Community Association Construction Law Blog

Real Estate & Property Law

: Florida Community Association Construction Law Blog

Witnesses: Builder was to pay closing costs

By Alan E. Tannenbaum

Published Bradenton Herald: Tuesday, December 9, 2009
By: Grace Gagliano - ggagliano@bradenton.com

TAMPA — A First Bank employee and two title company owners who worked on Coast Bank loan documents during Philip Coon's loan skimming scheme testified Tuesday the builder was responsible for paying closing costs.

That is the testimony the government hoped for to bolster its case in an ongoing evidentiary hearing designed to determine whether Coast Bank borrowers are entitled to restitution as a result of an extra 1 percent fee Coon charged to more than 400 loans in 2004.

The government argues borrowers did not suffer financial harm because the additional point did not impact the purchase price of the lot-home packages.

Nicole Farr, a closing supervisor for First Bank, which purchased the failed Coast Bank, said Coon's wife Melissa Beebee instructed her that all closing costs related to the deals with American Mortgage Link and Construction Compliance Inc. would be paid by the builder.

Trish Miller, owner of Majestic Title of Central Florida, and Sandy O'Grady, owner of Suncoast One Title in Punta Gorda, both also said loan documents they prepared for Coast Bank and American Mortgage Link stated closing costs were to be paid by Construction Compliance Inc., the builder.

However, all three witnesses also confirmed the closing costs were paid to the builder using funds from the Coast Bank borrowers' loan proceeds.

Sarasota attorney Alan Tannenbaum, who represents Coast Bank borrowers, has said that his clients are entitled to restitution because the extra point charged to the loan origination fees was paid from Coast Bank borrowers' loan funds.

'How is it the seller paid those closing costs?' Tannenbaum questioned Farr.

Farr said the closing costs were built into the construction price as the seller paid the costs.

The loans written for borrowers were sold at 90 percent of the home and lot's appraised value. The government argues the inflated loan origination fee never changed the purchase price because it was always set at 90 percent of appraised value and closing costs were built in.

'The actual closing costs were not reflected on the construction budget,' Farr said.

Coon co-conspired with John Robert Miller, president of American Mortgage Link, to charge an extra 1 percent fee and Coon took 75 percent of the money. Last year, Coon pleaded guilty to money laundering and wire fraud for illegally taking $1.2 million in the scheme. His sentencing is Jan. 25-29.

But the evidentiary hearing that needs to be completed before Coon's sentencing is turning into a rather lengthy one.

What was intended to be a two-day hearing is turning into anything but that. Due to the number of witnesses, and the complexity and volume of information, the hearing looks as though it will continue right up to the end of the year.

The hearing, which started Monday, will continue today and Thursday and Judge Elizabeth Kovachevich has scheduled Dec. 28 for continuance also.

'Somewhere along the line I think we're getting near the anniversary of this case, it's somewhere in January isn't it?, Kovachevich said, referring to January 2007 when attorneys began working on the case.

Full post as published by Florida Community Association Construction Law Blog on December 12, 2009 (boomark / email).