American Community Bank has filed a foreclosure lawsuit to collect more than $29 million on 468 acres of vacant land in far northwest suburban McHenry County controlled by a little-known developer who is already suing the small Woodstock bank.
American Community seeks to collect past-due loans on three parcels controlled by west suburban developer Frank Sajtar, including a 412-acre site near Main Street and Coyne Station Road just outside of Huntley, according to a complaint filed Jan. 30 in Circuit Court in McHenry County. A venture managed by Mr. Sajtar did not pay off the loans when they came due Dec. 17, the bank says.
The lawsuit is the latest in a string of foreclosure cases filed against sprawling development sites in remote areas, where banks, investors and homebuilders made losing bets that the suburban building boom would continue.
Mr. Sajtar, president of F.R.S. Development Co. in west suburban Wayne, is named as a defendant in the case because he personally guaranteed the loans, according to the complaint.
The foreclosure suit was filed about six weeks after Mr. Sajtar sued American Community, alleging that the bank wrongfully interfered with a deal to sell half the site to Mertz Development Inc.
Mr. Sajtar declined to comment. Troy Mertz, chief executive of Elmhurst-based Mertz Development, also declined to comment.
Mr. Mertz is not a defendant in either suit.
One of the bank’s Chicago Real Estate attorneys , Heather J. Macklin, a partner at Chicago law firm Barack Ferrazzano Kirschbaum & Nagelberg LLP, declined to comment on Mr. Sajtar’s allegations.
The foreclosure case is the second such lawsuit filed by the bank against development sites controlled by Mr. Sajtar. Also in late January, American Community sued in Kane County to collect more than $13 million on a 126-acre parcel in Hampshire, about 10 miles south of Huntley.
In addition to the 412-acre Huntley parcel, American Community is seeking to foreclose on:
• A vacant six-acre parcel on Main Street that’s zoned for commercial development.
• A vacant 50-acre parcel in Huntley on State Route 47, near Reed Road, about two miles east of the 412-acre site, which Mr. Sajtar earmarked for eventual construction.
For the 412-acre site outside Huntley, Mr. Sajtar floated several plans for residential and commercial development, but never made a formal zoning application, said Lisa Armour, director of development services for the village.
American Community issued two notes in May 2006, each for $12.5 million, to two ventures managed by Mr. Sajtar. One of the loans was increased to $15.2 million last year, bringing the total amount due to $29.3 million, including interest and other charges, the bank alleges.
Mr. Sajtar says in his lawsuit that in June Mr. Mertz agreed to buy half of the 412-acre parcel for about $12.5 million. But the bank stepped in and offered to sell its $12.5-million mortgage on the entire property to Mr. Mertz, according to Mr. Sajtar’s complaint.
The bank knew that if Mr. Sajtar’s venture did not repay its loan, Mr. Mertz could gain control over the entire site through foreclosure, the complaint says. Mr. Mertz then backed out of the deal with Mr. Sajtar but never acquired the loan from the bank, according to the complaint.
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