Bank seeks to foreclose on Orioles owner's home Jacobs unaware of Mercantile's move

January 29, 1993|By Mark Hyman and Jon Morgan | Mark Hyman and Jon Morgan,Staff Writers

Eli S. Jacobs, the financially pressed Orioles owner who has been trying to stave off creditors, now stands to lose his $2.25 million Baltimore County home to his bankers.

Mercantile-Safe Deposit and Trust Co., which lent Mr. Jacobs $2 million for the house, initiated foreclosure proceedings yesterday Baltimore County Circuit Court. Court papers do not mention whether Mr. Jacobs is delinquent in his $19,968 monthly payments to Mercantile or has breached another term of his mortgage agreement.

But for months, Mercantile has been trying to settle a lawsuit with Mr. Jacobs over another loan, which was intended for debt consolidation. James Smith, a lawyer for Mercantile, declined to comment on the filing.

A New York spokesman for Mr. Jacobs said the owner wasn't aware of the bank's actions.

Mr. Jacobs bought his Owings Mills home, complete with a winding driveway and gazebo, in January 1990, six months after he officially became the Orioles owner. Major League baseball owners are encouraged to maintain local residences. A spokesman for Major League baseball yesterday said officials there were aware of Mr. Jacobs' financial difficulties.

Since purchasing the sprawling house on Brooklawn Road, Mr. Jacobs has spent considerable time in Baltimore, frequently coming to see the Orioles play.

Yesterday's court actions are the latest sign of financial trouble for the owner, who reportedly is deep in negotiations to sell the Orioles. Last year, Mr. Jacobs was sued by four banks seeking repayment of delinquent loans.

Among the banks suing the owner was Mercantile, which last August claimed he defaulted on a $21.3 million loan. The two sides have since been involved in settlement talks.

Attorneys and others familiar with financial restructuring said yesterday's foreclosure filing could be part of a negotiated settlement between Mr. Jacobs and the bank.

Mr. Jacobs' $2 million, 20-year promissory note with Mercantile carries a 10.5 percent interest rate for the first three years. The terms were to change next Monday, dropping the payments to a half point above Mercantile's prime rate, adjusted monthly.

The note allows the bank to demand full payment with 60 days' notice any time after Monday.

The mortgage was one of several financing deals between Mr. Jacobs and Mercantile, which had aggressively courted him. The bank also had put up $47.5 million of the Orioles' $70 million purchase price. Last year it extended a $21.3 million unsecured loan.

That relationship soured last year shortly after Mr. Jacobs notified lenders in a letter that he would be unable to pay interest on some unsecured debt. Since then, Mercantile and two other banks have sued Mr. Jacobs over allegedly unpaid loans. Including a fourth bank and a group of investors that had previously filed suit, Mr. Jacobs is accused of owing $44 million in delinquent loans.

The documents filed yesterday allege that Mr. Jacobs owes about $2 million, or $1.9 million in principal and $85,738 in interest through the end of the month.

Mercantile's action was the first step toward foreclosing on the property. Mr. Jacobs may challenge the bank's petition to foreclose. If that fails, the court could issue an order allowing Mercantile to sell the house.

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