Commonwealth Journal

Local News

April 19, 2014

Local housing facility subject of $349,000 lawsuit

Somerset — A local housing facility is the subject of a lawsuit in U.S. Eastern District Court, with several major entities named as defendants — though the Somerset city attorney notes that’s actually more for their protection.

The defendants listed included the City of Somerset, Somerset Independent Board of Education, and Pulaski County government, as well as the company Somerset East Mt. Vernon Associates, Ltd.

The United States government is listed as the plaintiff on the suit noted as being filed April 16, regarding a residential property in default. The suit is on behalf of the Rural Development arm of the Department of Agriculture, listed as “a/k/a Rural House Service.”

The suit states that in December of 1990, Somerset East Mt. Vernon Associates delivered to Rural Development a promissory note in the principal amount of $345,740, bearing interest at a rate of 9 percent per year. The principal and interest were payable in monthly installments of more than $2,639, due until February 1, 2041. The defendant also delivered to Rural Development a real estate mortgage, with a lien to the agency against the property, located at 700 East Mt. Vernon Street in downtown Somerset.

“Defendant made payments of principal and interest on (the promissory note) from to time, but as of June 1, 2013, Defendant is in arrears in the amount of $21,518.70,” reads the text of the suit. “The last payment submitted by Defendant was received November 7, 2011.”

The suit also states that the defendant “has failed to pay county taxes on the property and is therefore in default under the terms of the mortgage.”

As such, the government is seeking a financial judgment against the interests of the defendant for a total of $349,499.60, including a principal amount of $332,692.19 plus over $13,177 in interest and more than $3,629 in penalty fees, and that Rural Development be adjudged to have an enforceable lien on the property  superior to all others, except liens for unpaid real estate ad valorem taxes.

The suit was submitted by U.S. Attorney Kerry B. Harvey.

The facility is not a government housing entity, and institute constitutes a private interest, according to Somerset City Attorney Carrie Wiese.

“It’s just a normal foreclosure suit,” she said. “The city and county and school board always get named in foreclosure suits.

“Property taxes have precedence over the mortgages or liens,” she added. “When a property is foreclosed in the city limits or in a school district, then the name of those entities are (listed as) defendants so they have the opportunity to come forward and say, ‘This company owes X mount of taxes.’ It’s so they can get their property tax money.”


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