A spirited debate between Fannie Mae and the owner of a more than 1,000-unit DeKalb County apartment complex has ended in a more than $30 million foreclosure sale.
On May 4, the Park at Briarcliff, located near the Target on North Druid Hills Road, was sold on the courthouse steps to Fannie Mae, which held the note and security deed to the property and had, a dozen years ago, provided credit enhancement on a $44.2 million loan funded by a DeKalb County Housing Authority bond issuance.
The dispute leading up to the foreclosure began when the Park at Briarcliff Inc., which owns the apartment complex—but not, according to its attorney, John A. Moore at The Moore Law Group, the 80 acres of land underneath it, which is under long-term lease from the Tuggle family—didn’t meet its deadline to remarket the bonds. 
When the debtor missed the deadline, Fannie Mae accelerated the loan payments.
On Feb. 2, “as Fannie Mae was awaiting receipt of a wire transfer from Debtor, promised by Debtor in consideration of Fannie Mae not exercising its right to conduct a non-judicial foreclosure sale which was scheduled that day, Debtor commenced [a] … bankruptcy case by filing a ‘skeletal’ (i.e., having filed none of the required documentation …) voluntary petition under Chapter 11,” Fannie Mae alleged in a motion in U.S. Bankruptcy Court for the Northern District of Georgia.
The motion, asking the court to lift an automatic stay and allow foreclosure proceedings, was filed by Elizabeth George of Aldridge Connors. George is out of the country and could not be reached for comment.
Fannie Mae alleged a host of problems with the loan and the property: The loan balance was $36.5 million, but an appraisal of the property gave it an “as is” value of $25.8 million; nearly a quarter of the units were vacant; 24 units had been damaged in a fire and the property’s condition was deteriorating because of “inadequate preventative maintenance.” Fannie Mae estimated that the complex needed more than $1.6 million in repairs.
In its response, the Park at Briarcliff shot back that “prior to the Note’s acceleration, the Debtor never missed a payment.”
The response also noted that the Housing Authority spent $400,000 trying to remarket the bonds at face value, but couldn’t because of the poor real estate market. In addition, the debtor also argued that it delayed maintenance because it was waiting on a redevelopment that never occurred.
“Over the years, the Property has been one of the few if not the only place for affordable rental housing in this immediate community!” the debtor alleged, also noting that “Fannie Mae and the Housing Authority have a common mission of creating and maintaining affordable housing.”
Judge James E. Massey issued a consent order permitting non-judicial foreclosure of the complex in April.
The case is In re: Park at Briarcliff Inc., No. 10-63241.