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.