United Development Funding IV fka UDFI

[actofwill]

My recollection is the same. UDF can be seen as making a spread between project loans at 10-15% IRR vs. equity + wholesale bank funding at 5-7%.

So whilst I imply that in the absence of 8-Ks my (biased?) expectation is that no material haircuts were taken on loans sold (if any, as Centurion financed away from UDF mainly). I do believe it's valid to say that UDFI has suffered "opportunity losses" as they could not fund new projects given the banks were pulling away from them. Without funding the return on equity is lower.

The cross collateralisation point of Centurion is indeed significant in this context. The affidavit of Centurion says THEY in fact had to let projects go to the likes of DR Horton because UDF was pulling the plug on them (caused by the banks pulling the plug on UDF, caused by Kyle Bass).

As mentioned earlier, Bass must have understood this "plot" quite well from the 2008 crisis in which it is alleged that he started the collapse of Bear Stearns on live on television. The mechanism of a "bank run" here at UDF is no different:

https://dealbreaker.com/2016/03/wsj-kyle-bass-cnbc-bear-stearns

The kicker ploy here was obviously to kill the auditor as well. Without financials banks can't lend, everyone in finance know this. The moment you have no financials the lending stops, this is a typical termination clause in bank loans.

In the meantime Centurion is ticking nicely along:

https://www.bizjournals.com/austin/news/2021/07/09/marble-falls-thunder-rock-centurion-american.html