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Bank Successfully Forecloses on Loan Mortgages

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Industry: Financial Services

Key Facts

  • Anglo Irish Bank's construction loan mortgages totaled $165M
  • The mortgager defaulted on the construction loans before completing construction on portions of the building but after tenants occupied the building
  • Under NY law, the authority of the receiver appointed in mortgage foreclosure actions is limited to the collection of rents and related matters

The Situation

Anglo Irish Bank filed an action in New York County Supreme Court to foreclose $165 million in construction loan mortgages. In that action, which was vigorously opposed, the bank retained approval of a receiver, but went one step further and asked the judge to authorize the receiver to complete the construction of the building with the financing of the bank charged to the mortgager. 

The Approach

This had never happened before in New York, as the authority of rents receivers is narrowly defined and limited by state and court rule. The borrower and guarantor zealously opposed the action and the expanded authority of the rents receiver.

The Outcome

Despite intense opposition, the building renovations were performed and completed, and the building was sold at a foreclosure auction pursuant to a judgment in favor of Anglo Irish Bank.