Bank Foreclosed Threat on 428-Unit Apartment in Iowa

by on States

The 428-unit W.D.M. apartment complex in West Des Moines, Iowa is under bank foreclosed threat for defaulting on a $43.8 million loan it took out from the limited partnership of New York Credit Funding.

Last February, New York Credit filed foreclosure action against CMS Apartment Portfolio, owner of one of the biggest apartment buildings in Des Moines. Robert Hanson, District Judge of Polk County has been requested to put out a foreclosure summary judgment on the Wellington Apartment.

The apartment complex was built sometime in the 1990s and its $18.6 million appraised value is among the highest in the said county. But court records showed that the apartment complex’s $18.6 million appraised value dropped by almost 33 percent from the 2003 assessed value of $27.9 million.

According to court documents, New York Credit is claiming that owners of the apartment complex owed around $47.6 million in loan principal as well as interest.

In 1998, CMS acquired the apartment complex for $21 million by using Wellington Apartments as well as its apartment complexes located in Peoria, Illinois and Indianapolis, Indiana as loan collateral. According to court documents, the apartment complex offers market rate rental units unlike other apartments which offer federally subsidized, low rents to moderate-income families.

Conlin Properties has been appointed receiver for the apartment complex last February. The receiver was under contract with New York Credit. Conlin Properties President Jim Conlin said that 94 percent of the apartment complex is under leased.

Under the foreclosure lawsuit, owner CMS Apartment Portfolio has defaulted on its loan when Edward Carlson, a partnership member, filed for a bankruptcy in the Chicago, Illinois-based federal court.

Furthermore, the foreclosure lawsuit noted that Carlson as well as three of his partners defaulted on the loan when their individual net worth declined and amounted now to not below $35 million.

Additionally, the lawsuit contended that the total liquid asset of the partnership is not over $500,000.

Lawyers representing CMS stated that the said partnership has never missed even a single mortgage payment on its loan with New York Credit and the apartment complex has an occupancy rate of 90 percent.

Based on court documents, CMS attorney Mollie Pawlosky stated that the said partnership has enough cash flow available to allow it to meet its loan obligations.

Also, CMS pointed out that the court must avoid repossession of a property that is leased 90 percent on the basis of technical defaults.

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