United Development Funding IV fka UDFI

[Jh5142]

Another allegation that Bass made is that UDF was improperly classified as a REIT. It's possible that they are still trying to resolve this. As I understand REIT regulations, you have to either own income production property or provide loans that generate cash to pay dividends. It's more complicated than that but I think those are part of the qualification.

Based on one of Hayman's presentations, Bass says the implications would be great if UDF was avoiding paying taxes at the UDF level by using the REIT status over a number of years. If I understand one of Hayman's arguments, think they were pointing out that if they never should have been a REIT then there could significant tax liability.

I'm just speculating but that could be a liability out there that we are unaware. I do not know that validity of that claim and I don't know if that could lead to a bankruptcy filing if it were true.