The government agency that administers loans used to build two apartment complexes in Marlinton has accelerated the loans and intends to liquidate the owners' loan accounts.

In 1979, the Farmers Home Administration (FmHA) loaned $384,170 to Marlinton Limited, a limited partnership, for construction of Fran Manor I, a 16-unit apartment complex for low-income individuals and families. During 1982 and 1983, the agency loaned $480,000 to Marlinton Limited II, a limited partnership, for construction of Fran Manor II, a 16-unit apartment complex for low-income elderly and disabled tenants.

The general partner for both of the limited partnerships is Nu-Tech Housing Services, Inc., an Ohio corporation. Kathlyn Cozart, of Pickerington, Ohio, is listed as Nu-Tech's responsible officer in several government documents.

The U.S. Department of Agriculture Rural Development (USDARD) agency now administers housing loan programs formerly under the purview of the FmHA.

On February 7, the USDARD Beckley office sent letters to residents at Fran Manor I and II, notifying them of the loan liquidation and informing them of a program, under which they can continue to receive rent subsidies.

The letter informs residents, "USDA has accelerated the loan and intends to liquidate the debt owed to the Government. If this results in pay off of the debt to USDA, you may be entitled to participate in the demonstration voucher program for subsidies."

The letter continues, "[the] voucher program will be available to any low income tenant who resides at the property at the time the debt is liquidated. This voucher will pay the difference between the comparable market rent for your unit and the amount of your rent payment at the time the debt is retired. You may remain at your current property or you may move to another comparable rental unit."

In November, Fran Manor I residents notified The Pocahontas Times that conditions at the apartment complex were deteriorating. At the time, the building was in obvious disrepair and 11 of the complex's 16 apartments sat vacant -- some full of debris. The grounds and common areas were in poor condition and there had been no hot water in the laundry room for four years. Residents said they had received little or no response from management.

USDARD Handbook 3-3560 outlines the potential results of a decision to liquidate a housing loan:

"If the agency decides to liquidate, there are several possible outcomes, which are as follows: the borrower may cure the default by developing and submit to the agency for approval a workout agreement that proposes actions to be taken over a period of time to prevent or correct a default; the borrower can voluntarily convey the property to the agency; transfer (sale or transfer and assumption of mortgage); foreclosure; payoff with use restriction; or debt settlement (cash only) for minimum bid or greater."

David L. Cain, USDARD West Virginia housing programs director, told The Pocahontas Times in December that the agency disfavors foreclosure, which would result in a public auction, because residents could lose their subsidized apartments.

Handbook 3-3560 states the agency's preferred outcome is a sale of the property to a third party:

"For the agency, a sale to another party avoids the costs of foreclosure, as well as the costs related to owning and disposing of a property. For the borrower, it offers the best opportunity for being released from the debt without a major credit history blemish. A borrower may sell the property to a third party even after the account is accelerated."

USDARD rural development specialist Shane Houck signed the recent notification letters to Fran Manor I and II residents.

Houck would not provide information on why the loans had been accelerated, the borrower's plans or specific information on potential buyers.

"These properties are for sale, but I'm not the realtor, so I don't know if there's been any potential buyers contacting the realtor or not," he said. "I'm aware of buyers out there."

USDARD administers $115 billion in loans across the country and will disburse $20 billion in loans, loan guarantees and grants through its programs in the current fiscal year. The loan programs are intended to support water and sewer systems, housing, health clinics, emergency service facilities and electric and telephone service.

The Pocahontas Times will report details on the disposition of Fran Manor I and II as they become available.

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