Mortgages Ltd. altered deal to benefit downtown Phoenix project

[jackson.jpg][Source: Andrew Johnson, Arizona Republic] — Investors’ rights have been a long-standing issue in the bankruptcy of Phoenix-based Mortgages Ltd. Former Managing Director Robert Furst testified in U.S. Bankruptcy Court that Chairman and Chief Executive Officer Scott Coles made the decision to alter an investors agreement to give Mortgages Ltd. more flexibility to bring in new investors as first lien holders ahead of existing investors.

Furst said he worked for Mortgages Ltd. from October 2005 to March 2008, when he quit.  He testified unexpectedly on a proposed loan extension Mortgages Ltd. was offering local real-estate developer Dale Jensen.  Jensen’s firm, SOJAC I LLC, has an approximately $24 million loan with Mortgages Ltd. for the development of a proposed entertainment district on Jackson Street in downtown Phoenix.  Furst said he wanted more information about Jensen’s finances before a judge approved the extension.

Jensen was current on interest payments but the loan principal came due in late September.  Because of turmoil in the credit markets, he likely wouldn’t be able to secure financing to pay off the balance, said his attorney, Don Gaffney.  SOJAC wanted to have the loan-maturity date extended a year.  Judge Randolph Haines ultimately approved the extension, calling it a reasonable deal.  [Note: To read the full article, click here.]

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