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The developer of a Greensboro shopping center said it has seen firsthand what a desperate bank will do to recover its loans.

Granite Development has sued Wachovia Bank, charging that Wachovia unreasonably tried to foreclose on its $14 million loan for The Shoppes at Battleground Oaks, a center anchored by a Harris Teeter at Battleground Avenue and Horse Pen Creek Road.

Wachovia denies any wrongdoing.

Granite is a Mount Airy company that has borrowed and repaid tens of millions of dollars from Wachovia in the past 20 years, according to its attorney, Bo Rodenbough. He said Wachovia’s behavior took a marked turn when its financial problems began in early 2008.

Wachovia began playing hardball with Granite, which had requested a routine loan extension, according to Rodenbough.

After hammering out an agreement to delay foreclosure, Wachovia made a demand that Granite refused.

The bank asked Granite to waive its legal rights to make claims against the bank for any reason “from the beginning of the world.” Granite principals, who had lost millions working with Wachovia investment managers, wanted to leave their legal options open, Rodenbough said.

Company executives felt the bank’s demand was unreasonable. “We have given on everything we’ve been asked to give on,” Rodenbough said, “but we cannot be asked to give on this point.”

On Jan. 20, Granite refused to sign the agreement, and Wachovia initiated foreclosure and imposed a $5.48 million fee to end an interest agreement with Granite.

Rodenbough, a partner with Brooks, Pierce, McLendon, Humphry & Leonard in Greensboro, said the loan was a construction loan for the Battleground project, which was delayed by unforeseen problems in relocating a cellular tower.

In addition, Granite entered into an interest “swap” agreement with the bank, which essentially guaranteed the company a low interest rate on a current or future loan if rates were to rise.

But in the summer of 2008, the bank refused to extend the loan, saying it would enter into a “forbearance” agreement to delay foreclosure, according to the lawsuit.

“Then the world turned upside down,” Rodenbough said. “In September, Wachovia is itself on the verge of being taken over by the federal government.”

The lawsuit, filed in Guilford County Superior Court, asks for more than $10,000 in damages and an order that Wachovia stop all foreclosure proceedings.

Wachovia issued a statement about the case: “While we cannot comment on the specifics, we can share that Wachovia strongly disagrees with the allegations in the lawsuit. Wachovia continues to lend to customers and is committed to helping them work through the current economic environment, while managing risk appropriately.”

Contact Richard M. Barron at 373-7371 or richard.barron@news-record.com