By Angeljean Chiaramida
Staff writer
October 17, 2008 03:56 am SALISBURY — At a foreclosure auction yesterday, it took only minutes for two local properties with a combined assessed value of more than $2.5 million to be bought back by the bank that foreclosed on their mortgages. The bank paid about a quarter of their current worth. The commercial properties owned by longtime area developer John A. Longo went on the auction block when the Newburyport Five Cents Savings Bank foreclosed on two of his properties in Salisbury. Along with the two Salisbury lots, which sold for a total of about $550,000 yesterday, Longo's 24-acre property in Groveland, assessed at $325,500, sold to a builder for $175,000, and his five building lots in Georgetown, assessed at nearly $1.3 million, were bought back in their entirety by the bank for $755,000. Longo's commercial building and two acres of land at 124 Lafayette Road were auctioned at 10 a.m. and drew five registered bidders who had to put up a required deposit of $30,000 to get in on the action. But when auctioneer Justin Manning of JJ Manning Auctioneers of Yarmouth opened the bidding on the property assessed at $619,000, no one raised a finger but the bankers, who bought it for $300,000. At Longo's property on Lafayette and Kendell Lane — a 16-lot mobile home park — there was more interest for the 9-acre property, assessed at $1,941,000, with 16 paying tenants. Ten men stepped up to the table to get the bidding packages. But when the bidding started about 11 a.m., the opening bid again came from the Newburyport Five and started at $200,000. Only one other bidder entered the fray, but dropped out after the bank upped his $250,000 bid to $260,000. A bevy of pickup trucks and SUVs brought men in construction boots — many local developers — to stand and chat with colleagues while considering the purchase. But there were no serious bidders. Part of the reluctance was that the properties were second mortgage foreclosures, and buyers yesterday would have been financially responsible for paying off the first mortgages on each, as well as any taxes owed and the winning bid, Manning said. Longo's first mortgage on the 124 Lafayette Road property amounts to $48,000, with about $1,500 in taxes owed. The first mortgage on the mobile home park is $343,000, and taxes owed Salisbury are about $12,300. Manning said he doesn't know the amount of each of the second mortgages on which the bank foreclosed. The condition of the credit market, real estate market and economy may have made real estate developers and builders very careful yesterday. Longo, who has built many successful developments in the region over his career appears to have been caught in the downturn in the market that's left lots in his subdivisions unsold and beach condominiums — usually somewhat recession proof — in Salisbury Beach empty and without buyers. Mobile home park Some interested parties could approach the bank now that it owns the property outright with the idea of striking a deal. That could include the tenants of the mobile home park. Watching carefully at the auction of Longo's mobile home park were a number of the parks tenants, most of whom own their dwellings but paid Longo $483 a month in lot rent. Tenant Ron Ray said there is a considerable degree of anxiety among some of the tenants, many of whom are retired. "They're wondering what's going to happen," Ray said yesterday. "They're worried someone will buy the park and evict the tenants so the park can be developed into something else. I've told them not to worry. Whoever buys the park would have to give us two years' notice if he wants to do that. And, he'd be responsible for either buying the mobile homes or moving the tenants." After the auction was over, one park tenant approached the bank to see if the tenants association could speak with officials about their options, including buying the property as a cooperative. Ray said it might take unanimous agreement of the tenants for that to happen, but it's a possibility. More foreclosures Foreclosure auctions may not be over for Longo. The Newburyport Five foreclosed on South Beach Landing LLC, the corporation, owned by Longo and his son Brett, that built the condo complex at 233 Beach Road in Salisbury Beach Center. According to the legal notices the bank placed in The Daily News over the past two weeks, unless something stops the process, the auction is scheduled for Oct. 30. The former site of the Gateway Motel, the Beach Road property with approved permits to build 32 condos was sold to the Longo's South Beach Landing LLC on Aug. 31, 2006, by Tim Mulcahy for $2.6 million. Mulcahy had purchased it from Frank J. Gorman in late April 2005 for about $1.54 million, according to information in the Assessors Office. According to a writ of attachment filed by the Newburyport Five at the Salem registry of deeds, the mortgage on the site is in excess of $5.1 million. Longo is not alone in running into trouble after a hot real estate market cooled quickly. According to Manning, his company's foreclosure auction business has picked up by 20 percent in the last month. "In the past, foreclosures have been about 5 percent of our business," Manning said yesterday. "Now it's grown to about 25 percent."
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