^^^ That's exactly what Freed is arguing Bank of America is doing, a behavior which is in bad faith and, if it can be proved, is unlikely to be supported by the courts.
I feel like Bank of America might lose on this one. Freed seems to have a very good argument that Bank of America knew exactly what cost over-runs they were facing when they closed on the loan in 2007. Take a look at this Crains article from today:
Freed renews charge of B of A ‘misconduct’ on Block 37
By: Thomas A. Corfman Nov. 02, 2009
(Crain’s) — Block 37 developer Joseph Freed & Associates continues to hammer away at Bank of America Corp.’s alleged bad faith in filing to foreclose on the mixed-use project, while the Daley administration isn’t taking sides.
Two ventures controlled by Chicago-based Freed allege the banking giant knew since 2007 of about $26 million in cost overruns largely due to the lower-level CTA station, according to documents filed late Friday in Cook County Circuit Court.
Meanwhile,
the Daley administration also on Friday sought to intervene in the case, not to halt the foreclosure, but merely to make sure a lower-level Pedway opens as planned and that leasing efforts continue.
In a blow to Freed, the city is not taking a position on the bank's motion to have a receiver appointed to take over the project from Freed.
Circuit Court Judge Margaret Brennan is expected to hear arguments in the case Monday.
After Freed took over the project and closed on a $173-million construction loan in April 2007, both the developer and the bank discovered that the cost of the subway station had shot up to $249 million, compared to the $155 million originally budgeted, according to a sworn affidavit by Joseph Carr, development director with Chicago-based Freed. The station was originally intended to handle express rail service to the airports, a feature that was ultimately dropped.
Of that additional station cost, all but $26 million was eventually left uncovered, according to the affidavit and documents attached to it.
Since then, Bank of America alleges the cost overruns grew to $34 million, when it filed its foreclosure lawsuit on Oct. 19 in Cook County Circuit Court, then to $42.6 million, according to a bank court filing last week.
Because the unfunded additional expenses exceed the available cash to finish the project, the construction loan is “out of balance” and therefore in default, the bank alleges in its foreclosure complaint.
But B of A’s tolerance of the cost overruns is evidence that the problem is not a “material” breach of the loan, and the bank’s delay in filing suit is a sign of its misconduct, according to documents filed in court by two Freed-related development ventures that are defendants in the case.
“The bank has sat on its rights and allowed development of Block 37 to proceed until it was on the verge of its scheduled opening,” Freed contends. “’The bank used the alleged imbalance to extract concessions to which it was not entitled.”
...
More here:
http://www.chicagobusiness.com/cgi-bin/news.pl?id=36007
nice to see something german in Chicagoland 
always love your updates george
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