Several lots in upscale East Tennessee
communities will hit the auction block this morning, after
foreclosure proceedings left them in a bank's hands.
Furrow Auction Co. is selling 21 lots that were
foreclosed by First Tennessee bank in a sale that features six
lots each at Rarity Bay and Rarity Pointe - in Vonore and Lenoir
City, respectively - plus three lots each at Rarity Mountain in
Jellico, Tenn., and Rarity Ridge in Oak Ridge.
Mike Ross, president of Maryville-based Rarity
Communities, said none of the lots is owned by his firm. Asked
about the state of his company, Ross said, "Well, we're just
trying to hunker down and hang on … as best we can."
Today's auction also features three lots in a
Campbell County project previously called The Villages at Norris
Besides the tough real estate market, Rarity
has faced some legal woes in recent months. In March, one of the
original partners in Rarity Pointe filed a lawsuit against LTR
Properties, which is owned by Ross. Meanwhile, Ross also is
facing a complaint in U.S. District Court in Colorado, where
several plaintiffs who bought property in Rarity Pointe or
Rarity Mountain claim they were victims of fraud.
At least four of those plaintiffs owned
properties that were foreclosed by First Tennessee and are
included in Saturday's sale. While First Tennessee was at one
time a defendant in the case, the bank is no longer a defendant.
Commenting about the lawsuit, Ross has said, "We find it has no
Among the six Rarity Pointe lots set for
auction today, all were sold to buyers from Colorado. They all
featured 100 percent financing from First Tennessee, including a
variable interest rate note.
Rarity Bay also has faced scrutiny from Loudon
County officials. The county's district attorney general,
Russell Johnson, conducted an investigation that found Rarity
Bay deeds prepared by a firm called Assurance Title in some
cases reflected prices that were higher than what buyers said
they paid for the property. Johnson's investigation was turned
over to the Tennessee Bureau of Investigation, which said in
April that its investigation was ongoing.
The auction likely isn't good news for home
values in the Rarity projects. According to records in Loudon
County, for example, Lot 225 in Rarity Pointe was sold to a
couple from Colorado in 2006 for $425,900. But when First
Tennessee took back the property in 2008, a deed valued the same
lot at only $322,000.
The 11 a.m. auction will take place at the
Cedar Bluff Holiday Inn, located at 304 Cedar Bluff Road.