Published: July 22, 2009 12:10 am      

Bridgewater subdivision collapses

More than 50 properties up for auction today after developers default on $1.17 million mortgage

Ralph Herr stood on his home’s back deck, admiring the foliage and portion of Little Wildcat Creek that runs along his property’s edge.

“This was our dream when we decided to move here,” the retired Eastern High School special education teacher and administrator said.

The forested palisade in Herr’s backyard was a contradictory image to the one in the front yard of his home in The Preserve at Bridgewater, which is off Center Road near Jackson Morrow Park.

Across from Herr’s home on Mackinaw Way begins an open panoramic of unsold lots and unoccupied homes. Out of the 66 properties in the subdivision, 13 have houses.

The unsold properties are up for auction today after Harris Bank foreclosed on 49 lots and six tracts in the subdivision because developers defaulted on more than $1.17 million in mortgage payments.

Mortgage Default

In April, Superior Court IV Judge George Hopkins awarded Harris Bank more than $1.19 million, according to court documents.

The bank sued subdivision developers Harmony Development LLC, McKean Construction Co., Craftsman Builders and Monroe Custom Homes. The lawsuit also listed as defendants Robert McKean Jr. from McKean Construction and Harmony Development, Christopher Monroe from Monroe Custom Homes and Michael Ullery from Craftsman Builders.

The developers, under umbrella company Harmony Development, originally took out a $1.57 million mortgage from First National Bank and Trust, which later merged with Harris. The developers then took out a second mortgage, bringing the total owed up to $2 million.

According to the lawsuit, the bank granted the developers their first loan extension in May 2007. After the developers defaulted on their fourth extension, Harris sued for what they owed and to foreclose on the properties they still owned.

As of March 12, the developers owed more than $1.17 million. Hopkins awarded Harris repayment of that debt, which included interest up to March, and another $15,000 in attorney fees.

McKean would not comment about the situation, and calls placed to Ullery and Monroe’s offices this week were not returned.

on the Block

After the April foreclosures, the Howard County Sheriff Department put up 49 lots and six tracts for its monthly auction today.

The neighborhood advertises properties beginning at $30,000 and model homes beginning at $170,000, almost double the median value of $91,460 for a house or condo in Kokomo.

The banks will not provide minimum bids until 1 p.m. today, which is when the properties will be officially for sale.

Bridgewater resident Donna Larison said she was not sure how much of a hit her property’s value has taken since her family moved there 2.5 years ago, but the value has definitely decreased.

“I found, almost as soon as we moved in, we lost money before the ink was even dry,” Larison said.

Larison estimated that home values in the subdivision have dropped about $10,000 to $20,000 from their original values.

“It’s so sad,” she said. “Any time I give my address or anything, they know where [the subdivision] is. They love the subdivision.”

Few Regrets

The subdivision has had its problems, but the residents who live their had few complaints.

Larison said she had no regrets about moving to Bridgewater.

“All the neighbors feel the same way,” she said.

But the drop in property value has changed some plans for her and her husband’s future.

“We definitely felt like [the house] would last us until retirement,” she said, “but now it’ll probably be our retirement. But we’re not unique.”

Herr, who already is retired along with his wife, said the neighborhood has been perfect for him.

“It’s got everything you need,” he said. “It’s near a hospital, banks ... but it’s still [secluded.]”

Herr said he felt sorry for McKean after the developer notified him last month about the foreclosures.

“McKean is a tremendous builder,” he said. “It’s just a shame this happened to him.”

Daniel Human is a Kokomo Tribune staff writer. He can be reached at (765) 454-8570 or at daniel.human@kokomotribune.com.