Replies to post #330 on United Development Funding IV fka UDFI

[Phaedrus77]

Thank you to the poster that replied to my previous message. I'm not a member of Ihub, so I can't respond privately.

On an unrelated note, I read through the damages section of Greenlaw's affidavit. In paragraph 249, Greenlaw states:

Defendants' actions caused UDF's reduced access to credit and caused UDF to lose profits on and/or equity in loans that UDF sold, liquidated or that borrowers repaid...

He then goes on to mention a loan from UDFLOF to Centurion that was divested at a loss. The only other mention of a loan loss is Buffington, which doesn't really affect IV.

I'd guess that if there were other major losses on loans sold, repaid, etc then they would have also been mentioned. So I guess that's a good sign that they're not.

I'm curious how you guys think UDF goes about getting its reputation back, or if it's even possible. Once you're branded as a Ponzi scheme, and the FBI raids your office, it seems to me that, even if you're completely innocent, you're going to have a hard time getting people to trust you again.

I'm thinking a liquidation would be the best result here. Most of the assets should be liquid by now, so it shouldn't take long. I don't know if Greenlaw would go for that though...he might want to limp along and keep earning fees.

[Jh5142]

I understand your point about $31 million across the whole complex being a low number. That’s a valid point. The other side of that argument though, is that it does indicate that they have a viable long-term business. Otherwise they would not have reinvested that $31 million into new land loans. Taking that step further, if they have a viable lending platform still, then there is value to The portfolio. We just don’t know how much value there is remaining in the portfolio.

I assume that they liquidated their loans against finished lot Loans and and houses under construction for builders. They probably did not take much of a loss, if any, on those. They also have a good portion of the portfolio invested in first lien loans. If They have to sell those they probably took a discount. However if they held those loans all the way through development of land, they probably will get the money back. The highest concern for me is the second lien loans that were primarily backed by municipal reimbursements and a pledge of the equity. If you had to sell those I’m sure you took a loss. However, if they are holding those until the land is ultimately developed they have a good chance of getting full recovery given underlying collateral value has increased in recent years.