Finlandia in court: Bank seeks foreclosure sale of residence hall

Sale most likely several months in future

HOUGHTON — A bank with a mortgage on the Finlandia Hall building is seeking to proceed to foreclosure.

Attorneys for IncredibleBank appeared at a hearing in Houghton County Circuit Court Monday.

IncredibleBank is looking to be declared in the superior position for their mortgage.

“Our position is they are in first direction with regard to the mortgage on that property,” IncredibleBank attorney Steve Polich said after the hearing. “And that’s what we’re trying to establish, because a lot of this is very historic.”

Judge Brittany Bulleit entered a default judgment discharging mortgages held by the U.S. Department of Education and JPMorgan Chase & Co. Another mortgage is also held by former members of Finlandia’s board of trustees that had loaned the university money.

IncredibleBank’s mortgage came in 2013 as a way to secure repayment for a $1.57 million loan to Finlandia, which used it to pay off the remainder of a $3.5 million 1984 loan that had been secured by Bank One (now owned by JPMorgan).

Finlandia also executed a promissory note extending the agreement five years later, also giving IncredibleBank security interest in the personal property at Finlandia Hall. While the BankOne loan was paid off in full, the mortgage was never technically discharged, IncredibleBank said.

By shutting down the university and filing for court-supervised dissolution, Finlandia violated the terms of its promissory note to IncredibleBank, the bank said in its complaint. As of January, the university owed IncredibleBank more than $910,000, the bank said. That amount includes the principal and interest, along with charges such as winterization and appraisal fees.

The U.S. Department of Education had mortgages of $332,000 and $1.925 million dating from 1988 and 1990, respectively. In both cases, said IncredibleBank attorney Dennis Tousignant, the DOE had not renewed the mortgages after 30 years, which would void them.

Another $542,450 mortgage is held by several Finlandia University board members, who loaned the university money in 1996. Surviving board members had been voluntarily dismissed; in other cases, IncredibleBank had worked with heirs or tracked down the holders of their estate.

Tousignant and Polich said no parties with potential claims had contested IncredibleBank’s position.

If IncredibleBank is recognized as being first, Finlandia Hall will then go to a foreclosure sale conducted by the county sheriff. The building was used as a residence hall before Finlandia’s closure last year.

“The property theoretically goes to the highest bidder, and banks usually bid what they’re owed and hope somebody bids some more,” Polich said after the hearing. “But very often the bank ends up with the property and needs to deal with it from there.”

Polich estimated the sale would happen six weeks to two months after a court ruling on the other estates with potential claims.


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