A glance at the legal notices this week will show that Property Owner John Vereuck is foreclosing on Mammoth Lakes Housing for defaulting on two loans connected with Suite 5 in the Sherwin III Plaza.
According to MLH’s Executive Director Pam Hennarty, MLH purchased Suite 5 from Vereuck for $266,000 in 2004. The purchase was owner-financed @ 8% interest.
A year later, MLH purchased the office suite next door (Suite 4) for approximately $270,000. While that purchase was majority-financed by Eastern Sierra Community Bank, Vereuck gave MLH a second mortgage on Suite 5 in the amount of $100,000 to help MLH make the downpayment on Suite 4.
This second loan was also pegged at 8% interest and required a balloon payment (approx. $93K) at the end of five years as payoff.
Mammoth Lakes Housing said it ultimately made $237,000 in payments to Vereuck over eight years. The old note/new note monthly payment on the 900 square-foot Suite 5 cost $3,500/month.
Hennarty said the economic downturn and concomitant reduction in MLH staff made the combined 1,800-square feet between the two suites unnecessary.
MLH formerly had a $650,000 annual operating budget and five employees in its heyday. It now has an approximate $520,000 operating budget, according to Hennarty’s lieutenant Jennifer Halferty, and two employees.
“We want to ensure that the organization can continue to operate the important programs that we offer for a long time to come, and unfortunately we are also facing difficult economic times. Cuts had to be made.”
Both sides claim they attempted to approach the other about a renegotiation of terms.
Vereuck, however, says MLH only asked to renegotiate after it had stopped making its payments, and he does not believe in negotiating with folks who are trying to intimidate him. To make a political analogy, he said he does not negotiate with terrorists.
“They [MLH] need to be exposed for what they are,” he continued. “They’re unethical.” Vereuck noted that a high percentage, perhaps more than 50%, of MLH’s deed-restricted affordable housing is no longer deed-restricted and went back on the open market.
Which means that the taxpayers ultimately footed the bill for what now may well be second homes for out-of-towners.