Some 120 lots in three East Pierce County subdivisions are scheduled for foreclosure sales in the next three months after two developers have yet to repay loans totaling almost $13 million.

Documents filed with the Pierce County auditor show SoundBuilt Homes Inc. and Premier Communities Inc., both based in Puyallup, each are being foreclosed upon after they defaulted on loans. Representatives from neither SoundBuilt nor Premier could be reached for comment.

According to the documents:

 • Premier owes Tacoma-based Rainier Pacific bank about $3.2 million, including interest and fees on a loan that came due in June. On Nov. 13, the bank is scheduled to auction 29 lots at Anderson Ridge, located off 186th Street Court East in Bethel.

 • Premier owes Lynnwood-based City Bank about $4 million including interest and fees on two loans that came due in mid-October. On Feb. 5, the bank is scheduled to auction 34 lots in Lake Tapps’ Northlake development, south of Auburn.

 • SoundBuilt owes Seattle Bank about $5.4 million including interest and fees on a loan that came due in May. On Dec. 18, the bank is scheduled to auction 47 lots in the second phase of Frederickson Estates, adjacent to Boeing’s Frederickson facility.

The recession has put builders in a tight spot. They borrowed from local and regional banks to develop land and construct new homes, but sales went off a cliff when credit dried up and businesses started layoffs. Now the banks, which issued many commercial real estate loans, are seeing the quality of those loans deteriorate as borrowers are unable to repay them.

The largest example so far is Cascadia, the master-planned community near Bonney Lake. Its owners filed for Chapter 11 bankruptcy on the evening of Oct. 15, the day before a foreclosure auction was to have occurred. Such a filing stopped the auction, and Cascadia chief operating officer John Ladenburg said the goal was to keep operating and restructure debt.

Cascadia had defaulted on two loans totaling $72.9 million including interest and fees from Seattle-based HomeStreet Bank.

Rainier Pacific, HomeStreet, Seattle Bank and City Bank are among several state banks that are operating under an order from federal regulators requiring them to increase their capital. Ladenburg said in October that he believed the regulatory pressure was part of the reason HomeStreet couldn’t modify Cascadia’s loans.

The recent foreclosure notices are much less than Cascadia’s. But it’s not clear how SoundBuilt, Pierce County’s largest homebuilder and the fourth largest in the Puget Sound region, is faring. Three attempts over two days to contact someone from SoundBuilt for comment were unsuccessful.

In October 2008, president Gary Racca said that the company had seen its staff fall from 110 to 30 in a year and a half, and that he had built a couple of hundred fewer homes than in previous years. Racca said then that he was sure a turnaround in the market was coming.

The most recent foreclosure notice is at least the fourth such sale SoundBuilt has faced since the beginning of the year. According to documents filed with both the Thurston and Pierce county auditors:

 • Fifty-seven lots from Lacey subdivision Horizon Pointe went on the block in March.

 • Five lots from Bonney Lake subdivision East Pointe went on the block in August.

 • Thirty-eight lots from Spanaway subdivision Wyndham Ranch, developed with Premier, went on the block in August.

Just because an auction is scheduled doesn’t mean it will happen. The debtor and the bank often continue to negotiate so they can come to an agreement before the auction occurs. Even if the auction goes forward, it’s unlikely a third party would get the property for a steal because the bank likely will bid up to the amount it’s owed, bankruptcy lawyers say.

Kathleen Cooper: 253-597-8546

kathleen.cooper@thenewstribune.com