On Tuesday morning May 6, as thousands of homes were being auctioned off on
courthouse steps across Georgia, 42-year-old residential developer David Moss --
himself besieged by souring bank loans -- drove to a Forsyth County subdivision
he was developing a mile and a half from his home.
There he phoned an employee and told him to have the sheriff's office send a
deputy to the subdivision, on Fowler Road off Atlanta Highway west of Georgia
400. The land had been made ready for 27 homes on a cul-de-sac, though none have
been built.
Then Moss went into the woods, laid down a blanket and took his own life.
When a deputy arrived at 10:22 a.m., Moss' wife, Laura, and Jessie Brooks, a
business associate of Moss', were already there. "Jessie advised that he
spoke with David several times today and that David kept apologizing about
business ventures they were involved in," the deputy wrote in an incident
report. "Laura advised that David was under a lot of pressure due to the
undeveloped properties and that the bank was pursuing foreclosure."
The nation's housing crisis is taking a huge financial toll and -- as Moss'
death shows in the extreme -- human toll, on homeowners losing their residences
to foreclosure, on home builders, on building supply firms, on lenders, and on
those who develop residential lots. Atlanta Business Chronicle published a
front-page story in the April 11 edition reporting on the mental fallout of the
city's first prolonged real estate slowdown in two decades.
As Congress debates a $300 billion bill to prop up the housing market,
evidence is mounting of the severity of the housing crisis.
The week after Moss' death, the U.S. Commerce Department
released housing numbers that indicate the single-family home starts dropped by
1.7 percent -- the 12th consecutive monthly decline and the lowest point in 17
years.
The banks that make the loans to the developers are now suffering. Delinquent
or past-due loans now exceed levels reported during the S&L Crisis of 20
years ago, and industry analysts and attorneys are projecting bank failures
later this year.
One in every 12 metro Atlanta bank loans is past due -- totaling roughly $13
billion -- according to first-quarter 2008 industry data.
To foreclose on a property in Georgia, a lender must publish a legal
advertisement for four consecutive weeks. Then, on the first Tuesday of each
month -- Foreclosure Tuesday, as it's known -- those homes are auctioned off
on the courthouse steps. According to Dewrell & Sacks LLP,
which tracks foreclosure, 8,022 Georgia homes are scheduled to be foreclosed on
June 3.
Many borrowers file bankruptcy to prevent a foreclosure.
In the first four months of 2008, bankruptcy filings are up 73 percent in
North Georgia compared with the same period in 2006, according to the U.S.
Bankruptcy Court for the Northern District of Georgia. On May 5, the
day before Moss died, 466 people filed for bankruptcy in North Georgia.
Metro Atlanta has a staggering 148,000 undeveloped home lots, according to
first-quarter data from real estate research firm Metrostudy Inc.
The city's typical two-year supply of home lots has ballooned to five years in
North Atlanta and nearly seven years in the southern metro. Some areas will take
years to recover.
Developers, like Moss, are particularly vulnerable in the current climate.
They purchase raw land, then build the basic infrastructure of roads, sewer and
electrical lines, then attempt to sell it to a builder to construct the homes.
As housing starts slow and homeowners face a credit crunch to obtain mortgages,
developers will have trouble finding eager home builders to buy their lots.
While foreclosed homes are selling for 85 percent of their initial loan
value, lots are being bought from banks after foreclosure for 20 or 30 cents on
the dollar, says Powell Goldstein LLP banking attorney Gerald Blanchard.
"Developers generally projected if one project failed, they could repay
with the earnings from another," Blanchard said. "But developers never
expected this kind of slowdown."
From attorney to developer
Those closest to Moss' family declined to speak about him. Multiple attempts to reach Laura Moss were unsuccessful.
Moss appears to fit the profile of a suburban real estate attorney who saw residential developers reaping windfalls and chose to become one of them.
He graduated from Auburn University in 1987 with a chemical engineering degree and from The University of Georgia in 1991 with his legal degree.
In 1994, with Steven Mills, Moss formed the Lawrenceville-based firm of Mills and Moss LLC, which prior to Moss' death had six attorneys.
Mills wrote in an e-mail in which he voiced his displeasure about Atlanta Business Chronicle's decision to report Moss' death that "Mr. Moss was a fine person, as well as a well-respected attorney and colleague who will be missed. Everyone was shocked to learn of his death. It was with deep regret that we announced the passing of Mr. Moss last week."
The firm since has been renamed.
In 1997, Moss joined with Doug Cotter, a board member of the Greater Atlanta Home Builders Association and the organization's 2005 president, to form Cotter Moss LLC.
According to the Web site of Cotter Moss, between 1997 and 2006 they developed roughly 4,000 lots in six of Atlanta's largest metro counties. Articles of incorporation showed Moss as an officer in some 20 development companies.
Some of that work took place in Forsyth County, where Moss made his home and which is one of the nation's fastest-growing counties. In March, according to data released by the U.S. Census Bureau, Forsyth was the eighth-fastest-growing county in the country. Since 1990, its population has nearly quadrupled to 160,000, creating incongruous sights such as mobile homes adjacent to massive brick dwellings worth nearly a half-million dollars.
"Every piece of land you could find in the county was going through zoning and planning," said Forsyth County developer Robert Forrest, who worked with Moss on some projects.
Mark Gilbert, a neighbor of Moss' Fowler Mill development, said nearby residential development has radically changed the area since he and his wife built their home in 1978.
Fowler Road was still dirt, he said, and only five people lived on the side road to Georgia 9, also known as Atlanta Highway. Now, Fowler Road has several new and recent subdivision developments -- including Moss' Fowler Mill -- all building homes with prices ranging from $300,000 to roughly half a million dollars.
"This used to be nice, quiet country," Gilbert said. "Now traffic's so bad on our road, I can't get out from seven to nine in the mornings, and four to six at night."
But Moss developed land all over the metro area. His other companies included Maristone Investment Properties LLC and Moss Developments LLC.
Doug Cotter, Moss' longtime business partner, said the death was the loss of "a great family man, a great friend and a great business guy." He declined to comment further.
Among Moss' transactions was the acquisition of 130 acres of raw land in southeast DeKalb County, a plot that remains undeveloped.
In December 2006, CRM LLC, another of Moss' companies, modified a $7.65 million loan from Wachovia Corp., according to courthouse records. That loan was set to mature on Nov. 28, 2008, with a repayment amount of $12.15 million.
Other transactions included a filing on Nov. 28, 2007, between Moss' Maristone Investment Properties, himself personally and partner Stephen R. Been. Been took a first lien position by investing $1.5 million in the venture.
Moss modified that loan on May 2 -- just four days before his death -- on a residential lot, extending the repayment date from March 1, 2008, to May 30, 2008.
Attorney Neal J. Quirk of Quirk & Quirk LLC handles foreclosures, more involving disputes between banks and residential developers and builders than homeowners.
A posted legal notice in the Forsyth County News indicated that SunTrust Banks Inc. is a client of his. He said the first step when a borrower gets in trouble is a "work-out" agreement in which the parties try to negotiate new terms.
"A lot of banks carefully consider input from the borrower," he said. "In a lot of situations, there is a long-standing relationship."
From there, the options get more confrontational. The second is foreclosure and the third is litigation.
Jones Day banking attorney Chip MacDonald declined to talk about Moss specifically but speaking generally about loan modifications and extensions said, "I think they indicate trouble for the developer."
Irons in the fire
About a year ago, Dick Jones began his own civil engineering company and did some consulting work with Moss. His clients are developers. He said he did not know Moss "very well" and said he met him through his children at King's Ridge Christian School.
In fact, the private school, best known for financial support from Atlanta Braves pitcher John Smoltz, seems to be a sort of nexus for the children of banking, legal and development professionals in the North Fulton and South Forsyth area.
Jones said he had been out of touch with Moss for about the last year. He described the work he did on Moss' behalf as consulting "on ongoing projects where he just wanted a second opinion, my thoughts on projects."
Jones said on some of Moss' residential development he "reviewed some existing drawings to see if there was a better way to do things, cut costs on things."
He said this work came at about the time the economy started to slow down.
"Some of the folks he knew filed for bankruptcy," Jones said. "He was taking more of a conservative stance at that point. He was backing off. Cautious would be the word. He didn't want to overcommit himself to something ... "
"I'd describe him as more conservative than some. I was kind of surprised. I got the impression he had lots of irons in the fire at once ... I thought it was a pretty wise move and showed him to have a keen eye on the market -- to recognize [the slowdown] and take action based on that."
Robert Forrest, who regularly worked with Moss on suburban real estate deals, described Moss as neither flamboyant nor an introvert.
"David was very business-savvy," Forrest said. "He was a good negotiator, since he had a background as a real estate attorney, but he'd never stick it to you."
Jones said he was "very much so" surprised to learn news of Moss' death from mutual acquaintances.
At the end, Moss appears to have succumbed to the stresses of his many ventures.
Increasingly, developers' and builders' professional associations are becoming more aware of their members' mental health needs.
"In any business, when it's got your name on the front door and you've spent all your life building it, to be hit with such an overwhelming challenge, a lot of these guys, it defines them," said David Ellis, executive vice president of the Greater Atlanta Home Builders Association.
"It's their businesses. They've spent all their life building it and in moments, it can be swept away. That would have to be very, very challenging."
Reach Manasso at jmanasso@bizjournals.com. Reach Rauch at jrauch@bizjournals.com.
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