LOGAN SQUARE — Congress Theater is being threatened with foreclosure after defaulting on a $4 million loan, according to a lawsuit filed in U.S. District Court this week.
According to the suit, owner Erineo "Eddie" Carranza took out the loan on the Congress Theater in August 2007 and made regular of monthly payments of $5,013 to $7,125 until Aug. 27, 2011, at which time the terms of the loan matured and Carranza was obligated to pay the remaining balance, about $3.7 million, in full.
The loan was originally taken out with National City Bank, which merged with PNC Bank in 2008.
Included with the lawsuit were three letters from PNC Bank sent to Carranza in August 2011, May 2012 and finally in September 2012 warning him the loan was in default.
However, Carranza said he is solvent and has always made his loan payments on time, adding that the default is over an insurance issue.
"I could sell that place for five times more than what I paid for it, than the amount of the loan, so I wouldn't go to foreclosure," he said. "I would sell it to a lot of interested people before losing it to foreclosure."
The principal balance was reduced by roughly $75,000 between August 2011 and September 2012, indicating Carranza did make payments during that year, but he was nevertheless in default because he owed the full amount, according to the letters included in the lawsuit.
Carranza's lawyer, Thomas R. Raines, also said the default was over nothing more than a lapse with an insurance policy required under the mortgage.
"It's not a money issue, he never missed a payment," Raines said. "We're trying to figure out exactly what it is, but it's an insurance issue ... in a week this will all be done because we'll have the insurance back in place."
Raines said the first he heard of the default was Wednesday, the day he received a copy of the complaint. As to the three letters sent since last August warning the loan was in default, he said, "I never saw them."
