About 650,000 US homeowners in trial loan workouts

Two prominent Southern California residential builders plan to jump back into the housing business by making loans for land acquisition and home construction.

Home development all but stopped in recent years during the housing crash and recession, but the founders of a Newport Beach company called Integral Communities say they think it’s safe to start lending.

“We may not be at the bottom, but new homes are selling again,” said Craig Manchester, a principal at Integral Communities and former president of Western Pacific Housing.

He and Eugene S. Rosenfeld, the former chief executive of Western Pacific, recently agreed to manage a $200-million fund for Oaktree Capital Management, a Los Angeles investment firm. The venture will be called Sentinel Capital Funding.

Western Pacific was a home builder founded in 1993 in Orange County during a major real estate downturn. The company was purchased in 2001 by Schuler Homes, which was acquired by D.R. Horton Inc. in 2002 for more than $1 billion.

Rosenfeld and Manchester founded Integral Communities in 2003 with other former executives from Western Pacific.

With few others making real estate loans, “we really think we have the stage to ourselves right now,” Manchester said. “That’s what attracted us to the opportunity.”

The market looks similar to the way it did in 1993, he said, when a lot of real estate was being sold out of foreclosure. The difference now, Manchester said, is that the continuing credit crunch has made it difficult for developers to acquire even low-priced property.

Sentinel Capital plans to make loans primarily in California. Its loans will be secured by first-trust deeds to the land or new buildings they fund, he said. The company is reviewing several potential loans, he said, and expects to close its first loan before the end of the year.

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