Friday, March 14, 2008
Tangible implications of Credit Crunch.
Real estate developer John Wimmer paid Citigroup Global Markets Realty Corp. almost $1 million last year to lock in a 5.6 percent mortgage rate on the refinancing of six commercial properties. At the November closings, Citigroup, citing plummeting demand for mortgage bonds, boosted the rate to 7.123 percent. ``I was very upset,'' Wimmer said in a phone interview from his office in Hales Corners, Wisconsin. ``We had many proposals to lock the rate with other financial institutions and we picked Citigroup because of their reputation and strength.'' Wimmer sued. So did a developer in Kentucky after Prudential Mortgage Capital Co. invoked the ``material adverse change'' clause in their loan agreement to raise his rate.