Detroit Bank Foreclosures Threat on First National Building

by on cities

Owners of the 25-story First National Building are under threat of Detroit bank foreclosures after they defaulted on their almost $22 million loan.

According to the Wayne County Circuit Court records, the historic building in Detroit, Michigan is facing foreclosure proceedings due to the failure of its owners to pay their bank loan. The building is located at Campus Martius Park near the Detroit River. Built in 1922, the building was originally designed neoclassical.

Court records showed that last month, owners Northern Group Inc. and FN Building LLC missed payment of their mortgage with National City Bank. As of August 25, the bank loan balance with National City amounted to $21.4 million.

According to industry experts, 66 percent of the building was leased. National City is planning to request the court to appoint a receiver who will take over the First National Building. A receiver appointed by the court has the authority over the building, including putting it on the market for sale.

Court records showed that FN Building and PBDM LLC Vice President Alex Dembitzer signed the bank loan amounting to $22 million which is now on default and facing Detroit bank foreclosures. Dembitzer is also the managing partner and principal of Northern Group.

Meanwhile, lender Capmark Bank and PBDM are embroiled in a legal squabble over a loan package totaling $25 million. The case involves PBDM’s Penobscot Building, a 47-story landmark property.

According to court records, owners of Penobscot building missed two months of mortgage payments, totaling $615,000, including late charges. Capmark has accused PBDM of diverting rents and misappropriating funds.

Penobscot owners argued that they have not misappropriated rents. They added that the money from rents was used to pay for improvements and operations. In its counter-claim filings, PBDM pointed out that Capmark’s own financial problems have resulted to a breach in the mortgage agreement.

Nationwide, industry analysts are concerned that the decline in commercial real estate market will continue. In fact, investors are already anticipating further commercial market deterioration for the remaining months of this year and into 2010.

Investors who are planning to purchase quality distressed properties at very low prices are hoping that defaults and scheduled due dates will boost buying opportunities.

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