Developer alleges lost millions on scuttled North Side condo project after PNC improperly foreclosed 'toxic' loan
A Glenview-based developer is pursuing a lawsuit against PNC Bank, claiming the bank didn’t play fair, costing the developer millions of dollars, forcing him into bankruptcy and causing the loss of a property slated for condominiums on Chicago's North Side.
George Bahramis filed suit March 25 in Cook County Circuit Court against PNC Bank, saying the bank breached its contract, breached its duty of good faith, enjoyed unjust enrichment, violated the Illinois Fairness in Lending Act and violated federal law by discriminating against certain borrowers.
On May 15, the bank asked the court for permission to transfer the case to U.S. District Court in Chicago, saying the suit involves citizens of different states – PNC Bank is based in Delaware – and because the suit invokes federal law. Otherwise, the bank has not yet responded to Bahramis’ allegations.
The suit stems from August 2007, when National City Bank agreed to loan $22 million to Bahramis’ company, Belmont & Hudson LLC. Bahramis executing a promissory note for $5.3 million.
The loan was for the development of a condominium building at 3177 N. Hudson Ave., near West Belmont Avenue and Lake Shore Drive in Chicago’s Lakeview East neighborhood. Bahramis said National City dispersed only a quarter of the loan, before the financially troubled bank was bought by PNC Bank in October 2008.
PNC called the $5.3 million note due shortly after.
In calling the note, PNC said there was a “material adverse change,” in that as part of the loan agreement, Bahramis was to pre-lease 22 condominium units within one year, but had only pre-leased 17 units. Bahramis said PNC was trying to dump “toxic” loans it had assumed from National City, in fear those loans would poison PNC as they had National City. PNC wished to maximize profit on these loans by forcing allegedly delinquent borrowers, who were otherwise in “substantial compliance” with their loan terms, into foreclosure, according to Bahramis.
Bahramis said PNC had classified his loan similarly.
Bahramis said he had relied on the lender’s promises and proceeded with his condominium development, also sinking about $1.5 million of his own money into what turned into a doomed project.
As a result of PNC’s treatment of his loan, Bahramis said the property in question was foreclosed upon in February 2010 and sold for $4.1 million, although it had been appraised at $8 million. Further, a judgment of about $4 million was entered against Bahramis, causing him to lose more than $3 million in equity and forcing him to file Chapter 7 bankruptcy. The bankruptcy was discharged in July 2013.
Bahramis said he was “financially devastated” by PNC's failure to honor the remainder of the loan and by the resulting foreclosure.
PNC Bank is represented by Crowley & Lamb, of Chicago.
Peoples Advocate Group, of Forest Park, is representing Bahramis.
A status hearing was set for May 22 in circuit court, with a June 17 status date in federal court.