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Feds cancel foreclosure sale of landmark Lafayette Towers high-rise apartments

The federal government on Monday canceled a foreclosure sale of the landmark Lafayette Towers high-rise apartments in Detroit at the request of the city government.

Detroit exercised its right under U.S. Department of Housing and Urban Development rules to decide whether to buy the property, said Naomi Patton, a spokeswoman for Detroit Mayor Dave Bing.

“The city isn’t interested in buying Lafayette Towers,” Patton said. “We’re just trying to ensure a best buyer can be found.”

If a private buyer is found, the city would purchase the two 22-story apartment buildings, turn around and re-sell them to that developer. The city is interested in ensuring the buildings get properly repaired.

The luxury apartments have 584 units, a fitness center, laundry room, pool and garage. HUD wants to require the buyer to make an estimated $10 million in repairs in 18 months, according to the original notice on the foreclosure auction posted on the HUD website.

“We want to work with Detroit as we would any city,” said Jerry Brown, a HUD spokesman in Washington, D.C.

The department might allow more time than 18 months for the apartment buildings to be repaired, Brown said.

“We’re talking about an investment that could have great value to the community,” he said.

In early July, HUD announced it would sell Lafayette Towers in a foreclosure auction. The department originally required at least $100,000 in cash for bidding at a scheduled July 18 auction. About two weeks ago, HUD postponed the sale and then canceled it on Monday.

New York-based developer Northern Group Inc. bought the towers in 2008 during the recession, but a failure to make payments threw the apartment buildings into foreclosure.

If Detroit is unable to reach a purchase agreement, the apartment buildings would be put up again for auction, Brown said.

Article source: http://www.detroitnews.com/article/20120730/BIZ/207300437/1361/Feds-cancel-foreclosure-sale-of-landmark-Lafayette-Towers-high-rise-apartments

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