Developers Embroiled in Lawsuits with Lenders


Less than 18 months ago real estate was the hottest game in town as new bank branches sprouted all over Northwest Arkansas and loan officers raced to embrace developers with open arms.

But that train, as the old saying goes, has left the station.

The most recent sign of the times can be seen in the growing number of lawsuits and other legal entanglements between developers and their bankers.

Jeff Collins, an economist with Streetsmart Data of Springdale, characterized the situation as a “perfect storm.” A hyper-competitive banking environment, explosive population growth tied to job creation and escalating land prices created the illusion that it was hard to make a mistake in the home building sector.

couple of large scale developers in the region, Tom Terminella and Ben Israel have found some lenders willing to work out payment arrangements and others opting to use legal remedy.

Terminella, and partners Myron and Milton Morter III, found themselves at odds with Little Rock-based Metropolitan National Bank, who in May filed petitions to foreclose on two Terminella developments totaling $11.8 million.

Metropolitan National, with assets of $1.8 billion, came on the Northwest Arkansas scene in June of 2005 announcing it would spend $30 million to build 11 branches in the two county area.

Around September 2005, Metropolitan National agreed to fund a $9.63 million residential development — Grand Valley Ridge in Springdale — for Terminella.

In November, a recent court filing states, Metropolitan National solicited a loan away from Springdale-based Signature Bank for Terminella’s Bentonville USA development company and five commercial lots it owned. Legal counsel for Terminella, James Penick III of Eichenbaum, Liles & Hester of Little Rock, recently filed a counterclaim against Metropolitan National Bank alleging breach of contract because the loans were in both in good standing…



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RealEstateRama staff editor manage to selection and verify the real estate news for State of Arkansas.


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