By Alison Rice. In July 2000, Steve and Whitney Remley closed on the perfect house for their growing family. They liked the location of the Steeplechase community, so convenient to I-75. They looked forward to enjoying the pool and the clubhouse. And they believed they'd found a good builder, one of the largest in the Cincinnati area.

But it's hardly been green acres for the Remley family or the hundreds of other Erpenbeck buyers in Cincinnati and northern Kentucky. The builder they chose--The Erpenbeck Co. of Edgewood, Ky.--is currently under investigation for bank fraud, as the FBI explores what happened to $25 million intended for construction loans that were never paid off, leaving homeowners without clear title to their homes.

It's an ironic turn of events for a family who paid cash for their home as the Remleys did. Savings, an inheritance, and the proceeds from a past home sale all went into their Walton, Ky., home, which they bought for $198,000. "We thought we were dealing with a reputable builder and apparently 52 other people did too," says Whitney Remley, referring to her fellow plaintiffs in a class action lawsuit seeking relief for cash buyers of Erpenbeck-built homes.

But that relief won't be found anytime soon--the judge who heard the case in September declined to certify the cash-paying homeowners as a class, saying their situations weren't similar enough to qualify them for a class action. Now they must negotiate the legal system on their own.

Photo: Phung Huynh

Once burned, twice shy

The 200-plus Erpenbeck buyers who financed their home purchase with mortgages have had better luck. They filed a class action against Peoples Bank of Northern Kentucky--the bank that accepted the misdirected checks--and reached a settlement with Peoples in September that established a fund to pay off the construction loans and remove the liens against the properties.

But even they remain a wary bunch, despite their legal success. "Until we get it in writing that the lien has been paid off, it doesn't mean anything to me," says Walton, Ky., homeowner Marlene De Los Reyes, who received a foreclosure notice earlier this year because of the outstanding construction loan on the house. She's already making plans to safeguard her family against such a situation in the future. "The next house, we will get a lawyer [to represent us at closing]," she says. "It doesn't matter how trustworthy we think [the builder is]."

Strained associations

Many Erpenbeck community homeowners' associations have also found themselves in financial straits, with unpaid bills and underfunded reserve accounts after the evaporation of Erpenbeck Co. support. They suffered as a result of the diverted home-sale proceeds: The first year of homeowners' dues were paid at closing by the buyers, not directly to the association but to Erpenbeck, which means the associations never received the money.

It showed. "Last spring, the grass was getting tall enough you could roll-bale it once you cut it," says Jason Lett, a Steeplechase homeowner and a member of the homeowners' association board.

The uncut grass provided a clue to just how troubled the finances really were. "The management committee [at Steeplechase] laid it out. They said, 'There's no money coming in, and we're already in the hole,'" recalls Lett.

Budgets were slashed, dues were doubled, and homeowners have volunteered to do whatever they can, from helping with maintenance to checking the pool chemicals daily so that the community's pool can remain open. Bleak as that sounds, Steeplechase is in better shape than other Erpenbeck homeowners' associations, some of whom reportedly can't afford to pay their insurance.

The whole situation frustrates Lett, who says published estimates for the cost of the Erpenbeck fiasco--$107 million including banks, buyers, and contractors--are incomplete. "We've got people volunteering to make up the difference [between what was promised and what was delivered in the community]," Lett says. "None of those things ever get factored into the total cost of this mess."