Albert Lea Inn owner Tonya Navarro signed a voluntary mortgage foreclosure agreement at the end of last month between her corporation Blue Dragon Properties and American Bank of St. Paul.

The agreement relinquishes her of the ownership of the property while also releasing her of the personal judgment ruling against her for $1.47 million.

This means that Navarro is agreeing to walk away from the hotel, and in return mortgagor American Bank is agreeing not to press her for anything.

“I’m kind of relieved, but I’m sad because I know what they did was wrong,” she said. “Just because I have no money to represent myself, I couldn’t follow through.”

The judgment in the same amount for her ex-husband Ruben Navarro, has also been vacated, she said.

According to court documents, in April of 2007, American bank loaned Ruben and Tonya Navarro, the principals of Blue Dragon Properties, $1.33 million to purchase the hotel. The loan was secured by a mortgage on the hotel.

American Bank alleged that Blue Dragon Properties failed to meet its obligations and last October filed action in Freeborn County District Court seeking foreclosure on the property, according to court records.

Navarro filed a response to the allegations, saying she received a predatory loan.

She states the bank made certain promises to her, and she relied on those promises — ultimately causing her and her company Blue Dragon, to suffer damages, according to court documents.

Navarro asserts that American Bank promised her that they would defer mortgage payments for three months, and those promises are credible by looking at the communication between the bank’s president and herself.

The bank president never requested mortgage payments throughout April, May or June, Navarro alleges in the court files.

In June, Navarro filed Chapter 11 reorganization bankruptcy for Blue Dragon Properties, but that case has also been dismissed.

She said the bankruptcy judge told her she needed $20,000 in her business account before she would be able to proceed, but because she didn’t have that amount, she ultimately had to dismiss the case.

The property now will go through the foreclosure process, with a sale through the Freeborn County Sheriff’s Office, said Freeborn County Recorder Kelly Callahan. Navarro will have a two-month redemption period.

Callahan said he has had some inquiries on the property, but most quickly decide against a purchase after finding out about other fees and taxes against the property that have also not been paid.

There have been rumors about the purchase of the building, but nothing official has come through yet, said Callahan and Freeborn County Auditor Dennis Distad.

Distad said it could be that someone has purchased it, but by the time everything gets finalized and brought into his office, it could be a week or two weeks.

“Nothing formal has been recorded as far as change in ownership,” he said.

What’s next for Navarro?

Navarro said she has plans to go back to school and become a registered nurse. She will go to school full-time and will work part-time.

She said she might be leaving the area, and she’s just thankful that her credit has not been ruined.