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CU System
Eastern Financial seeks judgment vs. condo developer
PALM BEACH, Fla. (6/10/09)--Eastern Financial Florida CU is seeking a $37.25 million deficiency judgment against condominium developer Merco Group and its principals related to the defunct Palladio condominium project in West Palm Beach, Fla. The project was not finished and it became one of the Miramar, Fla.-based credit union's largest real-estate losses (Palm Beach Daily Business Review June 9). A deficiency judgment is a court order stipulating the amount a borrower still owes the lender after a foreclosure. To get the amount, the appraised value of the property on the day of a foreclosure sale is subtracted from the total amount owed on the loan. Merco Group was the guarantor on a loan used to purchase the site of the condominiums that were never built. The credit union foreclosed on the 4.5 acre site in December 2008. In January, it filed the deficiency judgment claim in Palm Beach Circuit Court against Merco Group, Belinda Mereulo and Homero Meruelo. The $37.25 million represents the loan principal, interest and fees, minus the credit union's winning $100 bid for the property at a court-ordered auction. Last year the property was appraised at $43 million. The Merco Group claims the credit union can't have both a deficiency judgment and the property. Its attorney said it will fight the lawsuit. The condo project was one of a series of real-estate losses that sent the credit union into conservatorship in April. It is being run by Melbourne-based Space Coast CU.


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