My colleague Susan Feyder reports that the Gramercy Club of Edina, an upscale senior co-op housing complex, has filed for Chapter 11 bankruptcy. I first described the woes of this complex back in October, and followed it up with this post. The trial in the Gramercy Club case is scheduled to begin May 11.

Telsche Paulson was a fixture of her south Minneapolis neighborhood for a half century. Then she got behind on her mortgage payments. Read more here about what happened next, and why she got this threatening letter. You can also read U.S. District Judge Patrick Schiltz’s order that found Paulson had been deceived out of her home, equity and subsequent monthly payments.

My recent story about the financially troubled Gramercy Club of Edina senior housing complex sent shivers through co-ops across Minnesota. Groups that represent co-op organizations and members have found themselves reassuring nervous residents that a similar fate - being sued individually in a foreclosure action against the co-op developer - couldn’t happen to them.

“This is a unique circumstance,” said Bill Oemichen, president and CEO of the Minnesota Association of Cooperatives, a trade group for all manner of cooperatively-owned ventures. “The vast majority of senior housing cooperatives have a master mortgage that is guaranteed by the U.S. Department of Housing and Urban Development.” As part of that guarantee, residents are explicitly protected from the kind of action taking place against the residents of the Gramercy Club of Edina. The development is not part of his organization, he said.

(more…)

After a two hour court hearing this morning over the legal mess at the Gramercy Club of Edina, the judge ordered the parties to try to reach an agreement outside of trial. Jim Campbell, who lives at the Gramercy Club of Edina, said about 25 residents showed up for today’s hearing, and he’ll be part of a much smaller group in mediation before a retired judge on Wednesday. If they can’t reach an agreement, the case is scheduled to go to trial next year.