Trust Sues Starwood Over $46.85M Loan With Hidden Lien
The filing alleges that before Starwood originated the $46,850,000 loan, the same properties were already encumbered by a $27,601,000 deed of trust held by a third-party lender, Thistle Creek Partners, LP – recorded in Harris County’s official records. In other words, the lawsuit claims Starwood made a nearly $47 million loan against properties that already carried a senior mortgage of more than $27.6 million.
From there, things allegedly got worse. The complaint alleges Thistle Creek enforced the power of sale in its deed of trust, ran a foreclosure sale under Texas law, and took title to the properties through one or more affiliates. That foreclosure, the filing says, “wiped out” the liens securing the trust’s mortgage loan – leaving the trust holding a $46.85 million loan with no property behind it.
The trust alleges the loan documents gave it no rights to block the foreclosure, enter the properties, collect rents, or appoint a receiver to protect its interests.
What the trust wants now is the money.
The lawsuit targets four specific promises – known in the industry as representations and warranties – that Starwood made when it sold the loan. According to the filing, Starwood warranted that the loan documents were enforceable, that they gave the holder adequate tools to realize the security, that the deed of trust was a “legal, valid and enforceable first lien,” and that no senior mortgage liens sat on the properties. The complaint alleges all four promises were false when made.
