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By Christian Bautista
Bethany Liou wants to prevent foreclosure on the 63 unit Morgan Hill complex
Bethany Liou of Cupertino, a businesswoman that paid a previous $50 million settlement for a federal EB-5 claim, has filed a lawsuit to prevent a Morgan Hill lender from closing down a 63 apartment condominium.
Liou, via an entity named Diamond Creek Villa filed a lawsuit to prevent two condominiums located at 15680 Santorini Lane, 15665 Nice Lane, and 15655 Venice Lane, from being foreclosed, according to the complaint that was filed with Santa Clara County on August 15. Diamond Creek has filed Chapter 11 in bankruptcy court.
The Walnut Creek-based Mechanics Bank purchased the mortgages as part its merger in 2019 with Dutch lender Rabobank U.S.’s unit. According to the lawsuit, the bank pursued the foreclosure of the property based on “inaccurate or illegal interest rate calculation.”
According to documents filed in court, Mechanics Bank declared a failure on these properties as early as January 2021. At that time, there was a principal balance of $16,9 million on the loans. Due to the default, the bank raised interest rates on the loans from 2.6 percent up to 7.6 percent.
Liou claims the rate hike was illegal as it applied to all unpaid debts, not just her monthly mortgage payment. Liou alleges that the interest rate increase caused her to “fall further and further into debt at an increasingly rapid rate”. Her original mortgage payment of $60,000 per month nearly doubled overnight. The complaint claims that the alleged improper calculations led to a “windfall” of $2,000,000 for Mechanics.
A Mechanics Bank spokesperson declined to comment citing a rule that prevents the public from making statements about pending legal proceedings.
Liou’s firm Golden California Regional Center, and she herself, reached a 50 million dollar settlement in 2019 with the Securities & Exchange Commission. She was accused by the federal agency of transferring at least $45,000 from investors abroad into her private accounts. They were interested in investing in a Cupertino project that would qualify them for green cards through the EB-5 Program.
Liou wants damages as well as a restraining ordnance that prevents Mechanics’s sale of the property.
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