Wells Fargo Bank has initiated legal steps in Bartholomew County Superior Court to take FairOaks Mall to a sheriff’s sale this spring.
The foreclosure action would allow the mortgage holder to either gain control of the property or collect $21.2 million the bank says it’s owed.
No matter what happens in court with the foreclosure suit, existing leases would stay in effect even if the bank gets control of the mall and ends up selling it to another retail development company.
FairOaks, located along 25th Street on the city’s north side, is owned by Fair Oaks Mall Acquisition LLC of Lakewood, N.J.
The bank’s attorneys in a Jan. 24 filing asked Superior Court Judge Jim Worton for a summary judgment and to approve a sheriff’s sale for what they contend is a mounting bill for unpaid principal and interest on a 10-year, $17.5 million loan that dates to June 2006.
The bank filed a foreclosure suit against the mall’s owners last April, but took no additional steps to move the case forward for nine months.
If the mall’s owner doesn’t respond to the latest Wells Fargo motion by late February, Worton could order the 415,000-square-foot retail center to be sold at a sheriff’s auction. Such a move would give Wells Fargo the chance to take control of the mall or to sell it.
If the mall’s owners dispute Wells Fargo’s claims within 30 days of being notified, the foreclosure issue would go to a court hearing scheduled for April 18, county court records show.
Bartholomew County sheriff’s officials say the earliest that FairOaks Mall could be put up for sale at a foreclosure auction, if the judge orders one by the end of February or early March, would be April 9 or May 14. Sheriff’s sales generally take place only on the second Tuesday of each month, although a judge could order a special auction for a large piece of property.
The latest Wells Fargo motion includes a fresh accounting of what the bank says is Fair Oaks Mall Acquisition’s mounting bill for unpaid principal, interest and other charges linked to its June 2006 mortgage loan.
That loan, later transferred to other investors as part of a commercial real estate trust, originally was made by Canadian lender CIBC Inc. for $17.5 million during 10 years at 6.63 percent interest.
The suit contends Fair Oaks Mall Acquisition’s defaulted on its loan by missing eight $119,586.75 monthly payments between October 2010 and May 2011.
That led to the entire loan being called via a demand letter that was sent to the mall’s owners on May 10, 2011, the bank’s motion says.
The loan’s interest rate also kicked 4 percentage points higher to 10.63 percent, court records show, adding to the mall owner’s future interest charges and possible penalties.
Fair Oaks Mall Acquisition has made some unspecified partial payments since then, Wells Fargo said in its court filings, but added that those weren’t enough to satisfy the loan default.
Wells Fargo attorney Steve Runyan of the Kroger, Gardis & Regas law firm in Indianapolis declined to discuss the case. Zeff Weiss, an Indianapolis attorney representing Fair Oaks Mall Acquisition LLC, did not return repeated phone calls.
An accompanying affidavit from David A. Goertz, an officer with C-III Asset Management LLC, an Irving, Texas-based firm that helps banks and investment trusts with special loan situations and distressed real estate, listed the Columbus property’s major debts as of Dec. 1, 2012, as follows:
- $15.97 million for the remaining principal on its June 2006 loan
- $1.5 million for interest under that contract
- $1.4 million in additional interest
- $3.3 million in pre-payment and other fees