Two mortgage holders are competing to recoup their money from Mimma’s Cafe in Milwaukee.
Dover, Del.-based Acquired Capital I LP won a foreclosure in 2010 against Mimma’s Cafe Real Estate Holdings LLC. The cafe company borrowed from US Bank more than $800,000 secured by mortgages on the building at 1301-1307 E. Brady St. Acquired Capital bought the debt from US Bank before the foreclosure was granted. But Acquired Capital did not immediately schedule a sheriff’s sale for the property, and a lender cannot collect until a property sells at auction.
That auction now is scheduled for Monday.
Amcore Bank, which no longer is in business, also held a mortgage-secured, $100,000 loan on Mimma’s. After Amcore closed, Wilmington, Del.-based Bayview Loan Servicing LLC acquired Amcore’s loan to Mimma’s.
Bayview filed for foreclosure on Mimma’s in June.
The problem, said Russell Long, an attorney with Milwaukee-based Davis & Kuelthau SC, who represents Bayview, is that multiple foreclosures are not allowed on a single property.
US Bank filed first, and its larger debt means the bank has the first right to claim money garnered through a foreclosure auction, Long said.
Attorneys for Acquired Capital and Mimma’s Cafe Real Estate Holdings refused to comment.
Mimma’s owed Bayview $151,200.20 as of March, according to court documents, and the loan servicer has claimed it should be allowed to skirt the rule about multiple foreclosures because the Acquired Capital case has not gone to auction. The foreclosure process is not complete until a property has been auctioned and a sale is confirmed.
But Milwaukee County Circuit Judge Paul Van Grunsven disagreed and, in December, said he would dismiss Bayview’s case because of the Acquired Capital foreclosure.
Long said he understands that ruling, but he is trying to finesse the terms of that dismissal.
According to a draft order, Van Grunsven would dismiss Bayview’s foreclosure complaint with prejudice. That means Bayview would not be able to revive its claim against Mimma’s.
But if Mimma’s, which still is operating, pays off the Acquired Capital debt before the sale, Long said, Bayview’s mortgage would have priority.
“It would seem,” he said, “like that would be a kind of unfair result.”
So he has asked Van Grunsven to dismiss the case without prejudice, which would let Bayview file for foreclosure a second time.
Long also has devised a strategy that might make the Jan. 30 hearing on the dismissal status irrelevant. Bayview, he said, intends to bid on Mimma’s on Monday.
Jim Barry, president of Milwaukee-based commercial real estate firm Cassidy Turley Barry, said he expects the property will attract multiple bidders. Barry, who is not involved with the foreclosures, said Brady Street is an attractive area for redevelopment.
He said he would expect the Mimma’s property to be revamped as a restaurant or nightclub.
The popularity of the Brady Street neighborhood has prompted several calls about the auction, Long said, and that attention could work against his client if its bid Monday falls short.
“That all could be moot,” he said.
Editor’s Note: The above story was corrected Jan. 13, 2014, to reflect Acquired Capital I LP won a foreclosure in 2010 against Mimma’s Cafe Real Estate Holdings LLC.