Martin Farm project forced into foreclosure

<p>Three years ago, Anton Selkowitz devised a creative plan to save an historic home and surround it with a small Petaluma subdivision.</p><!-- Nothing to do. The paragraph has already been output --><p>But ultimately he could not find a way to save the development.</p><p>Last week, Westamerica Bank seized the half-finished Martin Farm project in foreclosure proceedings.</p><p>Selkowitz built only seven of the 16 homes at the East Washington Street subdivision. The project won praise from preservationists for the way it was designed around the 101-year-old Ellis-Martin house, a stately Craftsman-style farmhouse that is listed as a state and national landmark.</p><p>He is angry at the bank, saying it refused to modify his loan or accept offers from buyers willing to purchase the homes -- but only for less than what he owed on them.</p><p>"We're in the worst housing market in my lifetime, and as far as the bank is concerned, it's business as usual. They wouldn't cut me any slack at all," Selkowitz said. "Now they're suing me and are going to put me and a 36-year-old company out of business because of their greed and stupidity. It's not right."</p><p>Westamerica would not comment on Selkowitz's case or discuss how it works with borrowers with troubled loans, said Rob Thorson, chief financial officer for the San Rafael-based bank.</p><p>"Every situation is different. We're not going to talk about it in the public forum," Thorson said.</p><p>The bank has filed a lawsuit in Sonoma County against Selkowitz and his two investors seeking repayment of $3.56 million in losses. A judge removed one investor from the suit and the other investor wants out. Selkowitz, 59, fears filing for bankruptcy could be his only alternative.</p><p>Timing was terrible for the East Bay home builder, who began selling homes at Martin Farm in late 2007 just as the housing downturn deepened and a wave of less expensive, foreclosure homes saturated the market.</p><p>Selkowitz slashed prices on his homes -- from $575,000 initially to $399,000 last fall -- before halting construction. Both are familiar moves for builders struggling to stay in business in Sonoma County. Despite reducing prices 30 percent, Selkowitz sold only a single home.</p><p>Westamerica took ownership of the homes and vacant lots a week ago after failing to sell the project at one of the weekly public auctions of foreclosed properties on the steps of the Sonoma County Administration Building.</p><p>The builder questioned why Westamerica wouldn't modify his loan even after receiving an $83 million infusion of federal funds through a program designed to bolster banks against loan losses and to boost lending during the recession.</p><p>The demise of the Martin Farm project ends a bold effort to put up homes where other development attempts failed. The landmark status of the Ellis-Martin house thwarted developers who wanted to tear it down or move it to make way for residential or commercial projects.</p><p>Selkowitz, a Point Richmond resident, bought the 1.6-acre site in 2003. Working with architects ADR, he set out to preserve the house and incorporate some of its architectural features into the design of the new homes surrounding it.</p><p>"We get compliments on them still. We did the best we could," Selkowitz said.</p><p>With his investors, Selkowitz formed Historic Properties Development and took out two loans with Westamerica in 2006. The company missed its February 2008 payment, brought the loan current, and then missed its payment last August.</p><p>Westamerica foreclosed on the property and filed the lawsuit seeking repayment. The suit claims Selkowitz breached guaranties to repay the debt and that his investors also were responsible for providing funds to prevent defaulting on the loans.</p><p>Selkowitz contended he owes nothing more to Westamerica. He is challenging the guaranties as an attempt by the bank to circumvent state law that protects borrowers from having to pay loan debts after a bank has taken back the property, said his attorney, Donald Drummond, of San Francisco.</p><p>Adding to his frustration, Selkowitz said, are unsuccessful efforts he made to avoid foreclosure.</p><p>Selkowitz said he had a deal with two buyers to purchase the homes and vacant lots for $3.52 million, but the bank balked because the price was less than he owed on the loans. He said the bank also wouldn't agree to several similar short sales on individual homes.</p><p>"They wanted more money and we didn't have it. We were stretched to the limit," Selkowitz said.</p>