Bankrupt builder delays foreclosures

8300 Staples Trace Road in the Staples Mill Trace subdivision was one of several properties saved from foreclosure by the Chapter 11 filing.

8300 Staples Trace Road in the Staples Mill Trace subdivision is one of several Hallmark properties that faces a foreclosure auction at the end of October.

A local homebuilder trying to work its way out of bankruptcy has struck a deal to keep its lender at bay, at least for now.

Hallmark Home Builders Inc. has until Oct. 31 to sell a string of residential properties or allow Union First Market Bank to move forward with possible foreclosure.

Hallmark defaulted on a loan with Union and the bank demanded payment of the entire loan in full, about $4 million.

The bank scheduled foreclosure auctions for July 31 and Aug. 1 to sell 32 Hallmark-owned properties to repay the debt.

But Hallmark filed for Chapter 11 bankruptcy protection on the second day of the auctions, preventing about half of the scheduled sales. In turn, the bank asked bankruptcy court to allow the auctions to continue.

Earlier this month, the two sides reached an agreement that will allow Hallmark a short period of time to try to get the properties under contract for sale before the bank recommences foreclosure auctions.

The parties have asked the bankruptcy judge to approve the agreement and are awaiting a decision.

Hallmark’s attorneys said the company has lined up buyers for some of the properties, if the deals are approved by the court.

Hallmark said HHHunt Homes has offered to purchase seven building lots in Hunton Station in Henrico for a total of $616,000. The company said it has also received offers from individuals to purchase two houses in Hunton Station for $253,000 and $289,950.

Roy Terry Jr., a Sands Anderson attorney representing Hallmark, said the builder has more contracts in the works. He said if it continues to make progress selling off the properties, the bank could agree to put off foreclosure to allow more time for sales.

Union is represented by Jonathan Hauser, an attorney with Troutman Sanders in Virginia Beach.

The properties in question still owned by Hallmark include seven vacant lots and seven lots with houses in the Staples Mill Trace, Hunton Station, Mountain Laurel Townhouses and Lee’s Crossing subdivisions in Henrico County, as well as three lots with houses in Elwin Place, The Hollows and Glen Harbor subdivisions in Hanover County.

Terry said Hallmark’s woes began during the economic downturn several years ago.

“It starts with the recession,” he said. “It’s a situation that has happened to so many home builders in our area … Hallmark is one of the last ones that has come into this situation.”

Union is also trying to foreclose on a 657-acre property in Dinwiddie County owned by Reedy Creek Farms Associates. Reedy Creek Farms is owned in part by Hallmark president Thomas Towers Jr., according to bankruptcy filings.

William Casterline Jr., an attorney with Blankingship & Keith in Fairfax who is the trustee on the Reedy Creek issue, said a loan on the property is in default. Reedy Creek and Towers are the grantors of the deed of trust. Casterline said he didn’t know how much is owed on the loan. Reedy Creek borrowed $1.69 million.

A foreclosure auction on that property, at 21905 Manson Church Road in McKenney, is scheduled for Oct. 3 at the Dinwiddie County Courthouse, according to a legal ad.

Union had judgments ruled in its favor on the Reedy Creek debt. Towers and Reedy Creek have filed a motion in Richmond City Circuit Court to have those judgments set aside.

8300 Staples Trace Road in the Staples Mill Trace subdivision was one of several properties saved from foreclosure by the Chapter 11 filing.

8300 Staples Trace Road in the Staples Mill Trace subdivision is one of several Hallmark properties that faces a foreclosure auction at the end of October.

A local homebuilder trying to work its way out of bankruptcy has struck a deal to keep its lender at bay, at least for now.

Hallmark Home Builders Inc. has until Oct. 31 to sell a string of residential properties or allow Union First Market Bank to move forward with possible foreclosure.

Hallmark defaulted on a loan with Union and the bank demanded payment of the entire loan in full, about $4 million.

The bank scheduled foreclosure auctions for July 31 and Aug. 1 to sell 32 Hallmark-owned properties to repay the debt.

But Hallmark filed for Chapter 11 bankruptcy protection on the second day of the auctions, preventing about half of the scheduled sales. In turn, the bank asked bankruptcy court to allow the auctions to continue.

Earlier this month, the two sides reached an agreement that will allow Hallmark a short period of time to try to get the properties under contract for sale before the bank recommences foreclosure auctions.

The parties have asked the bankruptcy judge to approve the agreement and are awaiting a decision.

Hallmark’s attorneys said the company has lined up buyers for some of the properties, if the deals are approved by the court.

Hallmark said HHHunt Homes has offered to purchase seven building lots in Hunton Station in Henrico for a total of $616,000. The company said it has also received offers from individuals to purchase two houses in Hunton Station for $253,000 and $289,950.

Roy Terry Jr., a Sands Anderson attorney representing Hallmark, said the builder has more contracts in the works. He said if it continues to make progress selling off the properties, the bank could agree to put off foreclosure to allow more time for sales.

Union is represented by Jonathan Hauser, an attorney with Troutman Sanders in Virginia Beach.

The properties in question still owned by Hallmark include seven vacant lots and seven lots with houses in the Staples Mill Trace, Hunton Station, Mountain Laurel Townhouses and Lee’s Crossing subdivisions in Henrico County, as well as three lots with houses in Elwin Place, The Hollows and Glen Harbor subdivisions in Hanover County.

Terry said Hallmark’s woes began during the economic downturn several years ago.

“It starts with the recession,” he said. “It’s a situation that has happened to so many home builders in our area … Hallmark is one of the last ones that has come into this situation.”

Union is also trying to foreclose on a 657-acre property in Dinwiddie County owned by Reedy Creek Farms Associates. Reedy Creek Farms is owned in part by Hallmark president Thomas Towers Jr., according to bankruptcy filings.

William Casterline Jr., an attorney with Blankingship & Keith in Fairfax who is the trustee on the Reedy Creek issue, said a loan on the property is in default. Reedy Creek and Towers are the grantors of the deed of trust. Casterline said he didn’t know how much is owed on the loan. Reedy Creek borrowed $1.69 million.

A foreclosure auction on that property, at 21905 Manson Church Road in McKenney, is scheduled for Oct. 3 at the Dinwiddie County Courthouse, according to a legal ad.

Union had judgments ruled in its favor on the Reedy Creek debt. Towers and Reedy Creek have filed a motion in Richmond City Circuit Court to have those judgments set aside.

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