Payments were due on the 10th of each month, but when HGI missed its May payment, the bank took the cash out of the reserve fund; HGI never restored the balance. Reserves are typically used to supplement mortgage payments when the borrower can’t pay the full monthly amount and must be replenished to a minimum amount depending on the size of the loan. It is a practice similar to that of residential landlords who use security deposits when tenants don’t pay rent.
May 22 CIBC let the property owner know it had defaulted, but HGI has yet to make a payment. The investment firm “lacked sufficient revenue” to make the monthly payments, according to the complaint.
“New York retail properties are facing serious challenges due to current market conditions, where rents have dropped significantly,” said Richard Litton, HGI’s president. “We believe in the long-term prospects of this property and will