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Bank forecloses on Ives Hill Country Club

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The holder of the mortgage for Ives Hill Country Club on Flower Avenue West has started foreclosure action against the real estate company that owns the property.

HSBC Bank USA, N.A., Buffalo, filed state Supreme Court action Thursday at the Jefferson County clerk’s office against Prime LLC, Alexandria Bay, and its managing member, P.J. Simao, claiming it is owed about $490,000 remaining on a mortgage it originally provided to Prime in 2007.

Mr. Simao, who had not seen the action as of Thursday, said he will “vigorously” defend the action and expects it will have no effect on the club’s operations, with all leagues and tournaments going on as scheduled and the restaurant open.

“The golf course is open and will remain open, with business as usual as HSBC and I litigate this and other matters,” he said.

Mr. Simao claims the filing is a “strong-arm” tactic designed to speed up his approval of a pending settlement related to a judgment HSBC obtained in 2009 against DealMaker Auto Group, of which Mr. Simao is a principal. Instead, Mr. Simao said, the filing will delay the pending settlement.

“This is another example of HSBC acting in bad faith, as it has been my assertion they have done since 2007,” Mr. Simao said. “It’s certainly not a coincidence that they waited until the opening of golf season to try to discredit the great name that Ives Hill Country Club has enjoyed for 115 years, and just as HSBC has decided to no longer be a member of this community.”

Starting in 2007, HSBC placed monitors within DealMaker to ensure, among other things, that loans on customers’ trade-ins were paid off in a timely fashion. In late 2008, the state attorney general’s office began investigating the now-closed car dealer, ultimately determining that DealMaker had delayed paying off vehicles taken in on trade, leading to fines and other action against the company.

“HSBC and other professionals HSBC hired were inside my building, in charge of monitoring the sales and payoffs of vehicles, and any problems were never brought to my attention because HSBC was concerned more about getting their money as quickly as possible, with complete disregard for the customers’ vehicles being paid off in a timely fashion or for the business continuing to operate and people being employed,” Mr. Simao said.

In 2009, HSBC obtained a $10.1 million judgment against DealMaker, an amount later reduced by a judge to about $6 million. Mr. Simao said the amount remaining due on the judgment, after HSBC was able to sell vehicles seized from the company and he personally paid money toward the judgment, now stands at $662,000, plus interest and penalties that push the total to $1.2 million. He said that as recently as Monday, HSBC had indicated a willingness to further negotiate a settlement.

Mr. Simao claims that while the bank was aware of DealMaker’s problems in 2007, it also agreed to provide a $1.8 million mortgage to Prime to acquire the Ives Hill property. A “spreader” agreement was later entered into, modifying the mortgage and reducing the principal amount to $500,000. Mr. Simao said the mortgage called for interest-only payments of about $2,000 per month, which he has paid monthly for the past four years.

“The loan is current as of this month,” he said.

He said in late April, he received a letter from HSBC notifying him that the interest rate on the mortgage was rising from 4.75 percent to 7.75 percent, with monthly payments rising from $2,015 per month to $3,167 monthly. HSBC also billed Ives Hill for four years of retroactive interest payments at the higher rate, or nearly $50,000, due May 1, according to Mr. Simao. He said the letter contained no explanation for the rate increase or the bill. He sent a letter to HSBC questioning the amount due but did not receive a response. Instead, a foreclosure action was started.

Mr. Simao questioned the timing of the filing after four years of negotiations with the bank. He said it is his belief that the action is tied to HSBC’s decision to sell its north country branches to Community Bank and First Niagara and exit the market. He said he plans to file legal action to counter the foreclosure.

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