Bank of America is being sued by a group of bondholders on a Florida strip mall. This case involves a loan that financed the purchase of Plymouth Center strip mall in Fort Myers. The acquisition, in June 2007, was for $8.8 million. Bank of America loaned $6.8 million to finance the purchase. The mortgage was securitized in November of 2007.
The special servicer, Midland, and the securitization Trustee, Wells Fargo, want a Florida Bankruptcy Judge to force Bank of America to buy the troubled loan for $7.2 million. Midland and Wells allege that Bank of America violated certain representations and warranties surrounding the loan. They specifically claim that Bank of America gave incorrect leasing information about three tenants which caused the value to be overstated. The property was appraised at only $2.6 million in March 2009.
This area of the law will explode in the next few years as investors and bond holders search for ways to recoup some of their investment in securitized commercial real estate deals that were way overvalued. Stay tuned for more developments.