Skip to comments.Strip Mall Developer Sues Banks For Loaning It Too Much Money
Posted on 05/18/2009 5:50:27 PM PDT by Lorianne
Is this the first official allegation of predatory lending in the commercial real estate space?
A reader passes on a recently filed lawsuit brought by a Long Island retail outlet developer against the institutions that loaned him money. Among the defendants: LaSalle Bank, Wells Fargo and Principal Life Insurance Company (uh-oh).
What's amazing is how much it reads like a typical case of so-called predatory lending. The plaintiff, MASS OP LLC is swimming along with a manageable $40 million loan for his retail outlet at 5500 Sunrise Hwy in Long Island with no problem making payments.
Then all of the sudden, the big bad predatory lender comes along, offering him a wildly inflated refinancing loan, using some non-transparent technique for valuing the property. The hapless property owner is cajoled into taking a loan he couldn't afford, and voila, lawsuit.
We're not sympathetic to the owner -- a commercial real estate developer should have way more sophistication than some first-time homebuyer that may or may not speak good English, let alone bank legalese -- but if this is indicative of late-stage commercial real estate development, we've got a steaming mess on our hands.
Read the complaint.
(Excerpt) Read more at businessinsider.com ...
‘but if this is indicative of late-stage commercial real estate development, we’ve got a steaming mess on our hands. “
I’d wager we’ll see a LOT more of these.
IMO part of a company’s job is to represent their customers properly. Overselling is bad for your customer and ultimately bad for business.
The banks had a money machine almost as good as Congress’s and their greed got the better of them. I wish they’d all go to jail but we’ll bail them out with our taxes.
The owner doubles the loan to 82 million and few years later loss two tenants (15%) worth 2.4 million in rents. Now he blames the lender?? So where did the 40 million in refinance cash go. Seems the lender is the one who should be suing.
Anyone who has the credit to make a $40 million loan in the first place, isn’t exactly my idea of a “hapless property owner”...
“Seems the lender is the one who should be suing.’
Seems to me the lender is getting what they deserve.
Its not really the guys credit, after all the loan is secured with the property. The property which is now worth less than the original loan.
Item 16 in the complaints, page 8, says the lender operated out of greed and arrogance. This is said by a Long Island developer and law firm, presumably with a straight face.
Too bad self-esteem replaced shame.
A he must be related to a shifty lawyer.
Scorned? Sounds like you are judgemental and ignorant.
The bank and this guy made a business deal. People like you only want to hold the borrower to task. The bank knew what they were doing as this guy probably did too. It was their 40 million until they handed it to him using the soon to be worthless property as collateral. Stupid decision on their part.
I’m a small business owner. Go do a study on how many small business owners like banks. Banks are the worst place to get money.