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A complex mortgage that was meant to be the salvation of the Regency companies will be auctioned off April 28, almost two years to the day after the former home builder and land developer went out of business.

Mission Capital Advisors LLC, a New York-based financial services firm, is managing bids on a $25 million commercial mortgage backed security (CMBS) that was issued in December 2007 to Regency Capital Fund I LLC. That entity was formed at the request of JPMorgan Chase & Co. to hold the deeds to 20 properties in Iowa, Nebraska and Utah that were to be used as collateral on a total of $26.5 million in notes from the lender, a Regency lawyer testified during a Polk County court hearing last year.

As part of the sale, that loan is being packaged with another $25 million loan that is unrelated to Regency but has been managed by the same servicing company, Boston-based CWCapital Asset Management.

The Regency loan became muti-headed. It was secured through a JPMorgan commercial real estate trust and held by LaSalle Bank. The loan was assigned to Bank of America in August 2008, after that financial giant acquired LaSalle.

Bank of America filed a lawsuit in May 2009 seeking to foreclose on the loan. The buyer of the Regency loan will have to continue the foreclosure action.

Among the properties used as collateral on the loan is a failed Regency construction debris recycling center that has been the target of cleanup efforts by the Iowa Department of Natural Resources.

However, the properties also include warehouses, office buildings, retail outlets and industrial properties that currently are being managed by NAI Ruhl & Ruhl Commercial Co., which was appointed receiver pending the outcome of the Bank of America lawsuit.

Kurt Mumm, local president for NAI Ruhl & Ruhl, said most of the Regency properties are generating income and could be of interest to local investors.

Regency principals have said the loan package was a last-ditch effort to sort out the company’s finances after Wells Fargo & Co. decided to back out of a long-term lending relationship with the company, creating a cash flow crisis that was compounded by Regency’s ambitious expansion plans.

At the time it closed, Regency was the largest home builder in Iowa.

Mumm said a CMBS is unusual for Greater Des Moines, but became a method to finance a large portfolio at better terms than were typical of mortgages granted by local lenders. Such securities were complicated and became objects of scorn from some financial experts after credit markets collapsed.

“There was a significant amount of brain damage that had to be done on those deals,” Mumm said.

Mission Capital will accept initial bids on April 28, then select final bidders. Final bids are due May 18 and the deal will close May 27.