JP 3E Holdings Inc (JPTE)

[I ll be back]

Yes, his post caught my eye as well.

Do they not have to either pay off the mortgage or renegotiate it with the new owners?

Answer: The majority of multi-million-dollar commercial loans that fall into this category are NOT assumable and if the lender chooses to allow an assumption the new owner would need to qualify (financially and show prior apartment experience) along with the lender requiring the property taxes to be brought current. Additionally they would be required to pay an assumption fee. Anyone believing the lender approved this transfer without requiring the new buyer to bring the taxes current is living in a dream world.

There are four possible areas of default based on what I see at this time:
1) Transfer of ownership w/o lender approval.
2) Property taxes are not current.
3) Borrower's financial solvency with w/ $4M judgement.
4) New borrower's qualifications and financial strength or a lack of review is in question.

I can confirm that this loan would have required a lender review and approval in order to transfer the ownership. I can also confirm that I've personally worked with lenders where the owners failed to obtain such an approval, followed-up with an oh-shit moment when the borrower receives a default letter calling the loan due, after telling me they didn't need to seek the lenders approval. Yes, I actually watched an attorney advise his client once not to seek it, followed up with a default letter calling the loan due.

Flag: In order to qualify for the transfer, the new borrower must show his/her background to manage such a complex. In other words, apartment loans of this size require financials and backgrounds that will qualify.

Since the property taxes are listed as outstanding, its a safe bet this transfer was not reviewed and approved, and would support a conclusion that this loan is currently in default. Don't shoot the messenger.