The release notes litigation documents claim Mortgages Ltd.defaulted on its funding obligations for the 275-unit CenterpointCondominiums at 110 E. Seventh St. in 2007 by failing tofund loan draws in full before funding finally ceased. In themeantime, Mortgages Ltd. filed for Chapter 11bankruptcy in June, following the suicide of founder andCEO Scott Coles.

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A call to Richard Feldheim, president of Mortgages Ltd., was notreturned by deadline.

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The Avenue Communities statement also notes that in fall 2008,Avenue Communities and Mortgages Ltd. struck a $75 million dealwhich was to have been curative of Mortgages Ltd.'s originalfunding breach. However, except for $2.8 million in financinggranted on September 2 through bankruptcy court, there has been nomoney forthcoming from the troubled lender. Furthermore, thestatement notes, hearings continue to be delayed.

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"Mortgages Ltd.'s default on its funding obligations has alreadycost us tens of millions of dollars in damages," says Ken Losch,principal of Avenue Communities in the press release. He adds thatwith no progress on the settlement agreement and continued hearingdelays, Avenue Communities had no choice but to file suit."Mortgages Ltd. is in default with us; yet they are not workingtoward a resolution," he comments.

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Avenue Communities launched construction on Centerpoint in 2005.The developer has so procured $22 million in pre-sale commitmentsfor condominium homes. Losch expects to move forward onconstruction of the project, with plans to open Tower One in spring2009 and the retail plaza level during summer 2009.

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