United Development Funding IV fka UDFI

[Jh5142]

If its true, it could suggest that Megatel was paying MM a fee in exchange for UDF providing them capital for the homebuilding operating they could not otherwise obtain. In exchange, Megatel would pay higher prices for lots that other builders would not have paid.

It looks like the lot contract deposits that Megatel put down to buy the lots from UDF was very low. So, they didn’t have much risk in the deals in the form of capital invested. A way to get a home builder to pay above market prices would be to de-risk the deal for them. In other words, don’t require much deposit to control the lots and then loan money at very high advance rates to that builder.