LandCap buys land loans from Wachovia

In a sign that the vultures are circling around troubled loans, LandCap Partners of Los Angeles announced plans to buy $40 million of troubled land and construction loans from Wachovia Corp. of Charlotte, N.C. LandCap, a closely held national residential land company headed by former KB Home executive Jeffrey Gault, created a joint venture to purchase the loans, which have a book value of between $75 million and $80 million. Many of the loans were made to land developers and are backed by 2,900 house lots, and many are in some form of distress, either for being delinquent or because of falling land values. “This agreement signals our ability to acquire residential land loans on a national scale and manage the associated risk in this challenged workplace,” Mr. Gault said in a statement issued by LandCap today. “We hope this is the start of a long-term relationship with Wachovia.” For its part, Wachovia will be able to move the troubled loans off of its books. LandCap will service the loans and foreclose on the assets if deals can’t be worked out with borrowers.