[Source: Andrew Johnson, Arizona Republic] — Attorneys for Mortgages Ltd. plan to unveil settlement agreements this week with several developers who contend that the bankrupt real-estate lender underfunded construction loans. The settlements could allow some of the developers to move forward on a boutique hotel [in downtown Phoenix], high-end condos, and other high-profile projects that have stalled because of the lender’s bankruptcy. The agreements, subject to U.S. Bankruptcy Court approval, will affect the standing of more than a thousand investors who supplied Mortgages Ltd. with millions of dollars to make construction and development loans.
Investors’ rights are a sticky issue in the 3-month-old bankruptcy. Mortgages Ltd. had more than $900 million in about 70 loans to developers and land speculators when one of its borrowers pushed it into bankruptcy in late June. Most of the money came from about 2,700 investors, who put money in various investment vehicles the company managed. Some invested directly in specific loans. Others bought memberships in limited-liability companies that owned interests in multiple loans. [Note: To read the full article, click here.]