Grace Youth and Family Foundation fighting foreclosure
Grace Youth and Family Foundation is trying to protect its property and assets while it fights against foreclosure of the foundation’s Net Cafe and other property.
First Commonwealth Bank filed foreclosure complaints in Butler County Common Pleas Court in March against the nonprofit foundation, claiming it owes approximately $292,244 on two loans borrowed in 2015 and 2017. The bank is seeking full payment.
The complaints seek payment of $265,401 in principal, interest, late fees, a prepayment penalty and a satisfaction fee from a $314,000 loan issued in 2015, and $26,842 in principal, interest, late fees, a prepayment penalty and a satisfaction fee from a $44,000 loan issued in 2017.
“We’re going to try to protect our property and assets while we work through this with the bank,” said Bill Halle, founder of the foundation. “We’re going to get an attorney to file whatever is needed.”
In April 2011, the bank provided a loan to the foundation for $314,000, which was 59.91% of the $533,022 value of its property and land and 47.06% of its total assets. This was the first of three financing efforts planned for the renovation of two old buildings, said Halle, who established the foundation in 1990.
When Phase 1 was completed in October 2015, the bank financed Phase 2 renovations by rewriting the original loan for a total of $314,032, which was $49.12% of the $639,195 value of the foundation’s property and land and 40.67% of its total assets, he said.
After Phase 2 was completed, the loan was scheduled to be rewritten the third and last time to finance Phase 3 in fall 2019 to complete the renovation projects started in 2011. Unfortunately, due to the sudden death of Halle’s father and subsequent health and housing needs of his mother, the financing was delayed until spring 2020, Halle said.
Due to the COVID-19 pandemic and with the advice of a bank representative, the foundation did not complete the refinancing in March 2020, he said.
“Two years of restrictions hurt us. Our programs are self-funded. That had a significant impact on our revenue streams,” Halle said.
The foundation tried to weather COVID restrictions and shutdowns, but because of its faith-based nonprofit status, it did not qualify for any COVID assistance. However, the foundation established two new revenue-producing community programs during this period and was ready to complete Phase 3 refinancing in September 2020 for $310,000.00, which was 41.49% of the $747,209.72 value of its property and land and 32.72% of its total assets, Halle said.
The declining percentages of the loans in relation to the value of the foundation’s land, buildings and assets indicates that the completed renovation work increased the value of its property and assets, he said.
“This is where our frustration began,” Halle said. “All our efforts to communicate with First Commonwealth Bank about completing Phase 3 financing were not successful and (the bank) offered only forbearance.”
He said the forbearance would have given the bank the ability to place debt liens on all foundation properties, but the forebearance documents the bank wanted him to sign did not include the amount of interest owed or repayment terms.
Forbearance is a temporary postponement of loan or mortgage payments. Lenders grant forbearance as an alternative to forcing a property into foreclosure or leaving the borrower to default on the loan. Lenders and their insurers are often willing to negotiate forbearance agreements because the losses caused by foreclosures or defaults typically fall on them, according to Investopedia.
Halle said a bank representative called him in March 2021 and said the bank would not complete the Phase 3 financing because the foundation was too high risk, even though it completed the goals of the previous loans and was in a better financial position than it was when the first loan was approved.
In July Halle said the bank called him and said it was going to offer additional forbearance, but he was not sent any paperwork. Shorty after that, the bank notified the foundation that it planned to foreclose on the original loans.
In the foreclosure complaints, the bank said it sent the foundation demand letters in November 2021 seeking immediate payment of the balance of the loans because the foundation defaulted on payments.
