All the players are already accounted for. The greed of UOB to do the loans and the greed of Lippo to sell the properties, as well as the greed of the agents and lawyers are all there to see.
From my research, the units were first offered for sale as new units and sold in 2007 at between $2500 and $2600 a sq. ft. By mid 2014, the price had already dropped to around $1400-$1500 per sq ft. a huge drop, in fact some units almost dropped 50% in price. But the common knowledge among my real estate agent friends is that the initial offer price in 2007 was the peak of the pricing for these units. I personally never bought in Sentosa, as I don't like 99 year leasehold. After that, it was pretty much a down trend in the price per sq ft as evidenced by resale pricing. As mentioned, the cooling measures of 2009 and the increase stamp duties of 2011 made the resale price lower then the original sale price. When UOB was approached to finance these units in 2011, anyone of their loan officers should have known that the prices that these units sold for (close to the original launch price of $2500 per sq ft) is simply not the market price now. Even a loan officer with cursory knowledge of the Sentosa developments would have known that the prices took a hit. Lets be clear on one thing. These loan officers who do $6million properties loans are not the branch guys that do the $400K HDB flat loans. They are supposed to be much more senior. And for this amount, they might even have had to go to a credit committee at the bank, because its beyond their approval limit. In any case, when the valuations came in supporting this high price, another set of alarm bells should have gone off at UOB. i.e. why are these particular 38 units worth $2500 per sq ft when all around it and in the same building, you can get resales units for $2000 per sq ft or less. If they are facing the sea, maybe. But those units are usually the ones that sell first.
You can bet your bottom dollar that Lippo offered the 2 agents extra bonus commission on top of the standard 1-2%. That is why they went out and got straw buyers and paid them $100K to do the application and buy the units. I believe the original plan was to rent out the units to high end executives and use the rental income to debt service the UOB mortgage. But the high end rental market was doing poorly by 2010-2011. Some of my friends had difficulty renting their condos for $20K a month or more. Used to be no problem. So perhaps, they could not get tenants or could not get the rental rate they needed and hence ended up defaulting.
when the bank sees 38 buyers coming in to buy $6 million condos, they see them not as housing loan clients but more as wealth management clients. They might have bend over backwards to approve the loans (even though they may not outwardly debt service) in the hopes that they will win future wealth management business (much more profitable then housing loans) from these clients. So, its the bank's greed. I just hope they were not stupid enough to ignore the valuation report. If the valuation report supports the high price, UOB should sue them too. Yet, I see no mention the valuators were brought to court.
By the way, I suspect that the $181 million amount is actually realised losses. I believe that UOB has already foreclosed and resold the units that defaulted and ended with a shortfall of $181 million, and hence is now suing Lippo. I think they need to sue the lawyers for Lippo as well as their own valuators too.
