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Post by nemesis on Jun 2, 2020 14:03:57 GMT
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Post by Moderator on Jun 3, 2020 20:29:35 GMT
OSC investigated Paramount in 2016 for violations of the security laws committed between 2014 and 2015 when the investors’ complaints were probably filed.
5 years later the legal proceeds are still underway. It takes time but the long arm of law will get them sooner or later. The folks at HE cannot be serious if they hope investors will get bored and forget about the loss or get scared by insults and threats coming from them.
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barb
Junior Member
Posts: 11
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Post by barb on Jun 4, 2020 1:03:15 GMT
With the "minority group" silenced - we did not hear from Robert Mitchell in a while - it becomes increasingly difficult for Larry Dunn to provide explanations for his inaction & inefficiency in resolving the fund problems.
The investors who trusted and supported him will soon start to look for answers, as they are worried about their investment the same way we are.
In the end the top priority of each investor regardless of how they voted, is their investment and not to please and support Mr. Dunn in his own plans
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Post by nemesis on Jun 4, 2020 1:16:05 GMT
The only reason for Mr. Dunn and Mr. Dwyer to keep the fund going is to churn the business for more mortgage committment fees. That's it. That's all there is. Otherwise they would start to wind the business down. Not a fire sale. Just not renew the current mortgages - pay them out to the investors as they come due. Put the real estate on the market and see what its worth. Sell the current real estate where it makes sense. Might have to wait a bit on other real estate as the market recovers. None of this puts money in their pockets. That's why they are so resistance. It will also come to pass that the mortgages they took on were nowhere near loan to value. They walked on the wild side with our money because those fees were fantastic - for them. The HE management and directors have treated themselves very very well. Hard to walk away from that cash in their pockets.
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adam
New Member
Posts: 5
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Post by adam on Jun 5, 2020 19:40:17 GMT
Mr. Dunn & Dwyer continuing to underwrite new mortgages is not only selfish, but totally irresponsible in the current economic environment.
As Warren Buffett puts it “This is a very good time to borrow money, which means it may not be such a great time to lend money” and low interest rates do not justify taking the surging risks of investing in mortgages.
D&D going on lending investors' money for their own job security would be a huge mistake on their side, for which they would be hold responsible one day.
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Post by nemesis on Jun 5, 2020 21:10:47 GMT
Mr. Dunn & Dwyer continuing to underwrite new mortgages is not only selfish, but totally irresponsible in the current economic environment. As Warren Buffett puts it “This is a very good time to borrow money, which means it may not be such a great time to lend money” and low interest rates do not justify taking the surging risks of investing in mortgages. D&D going on lending investors' money for their own job security would be a huge mistake on their side, for which they would be hold responsible one day. This is what they are currently doing as I type. They have stated that the company is status quo - which means lending money out for mortgages. That was the entirety of the original business model. Short term, high interest mortgages - with low risk to investors. Sounds pretty quaint now doesn't it after all the smoke and mirrors are pulled away and we see what a mess this MIC has become.
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Post by thebigshort on Jun 6, 2020 20:26:57 GMT
This is what they are currently doing as I type. They have stated that the company is status quo - which means lending money out for mortgages. That was the entirety of the original business model. Short term, high interest mortgages - with low risk to investors. Sounds pretty quaint now doesn't it after all the smoke and mirrors are pulled away and we see what a mess this MIC has become. I always assumed that HE, with the reorganization plan hanging in the air, is not underwriting news loans. With COVID-19 turning upside down the real estate industry it might not even be feasible, operationally speaking: - How to get a handle on property valuations? The uncertain prospects of a quick economic recovery have made property valuation a very difficult problem in short to mid-term.
- HE needs time to change the underwriting rules to price in the new increased risk.
- There are also expectations for more defaults; with no new investors, where is HE going to find the money for new mortgages – assuming that a borrower will show up in short term?
My take on HE underwriting new mortgages during COVID times is that even if they were tempted by the origination fees, they would not have the opportunity and the means
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barb
Junior Member
Posts: 11
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Post by barb on Jun 7, 2020 21:04:43 GMT
Maybe we should ask Tim Dwyer if the assumption that HE does not plan to underwrite new loans is correct.
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Post by maryanne on Jun 15, 2020 19:55:54 GMT
I always assumed that HE, with the reorganization plan hanging in the air, is not underwriting news loans. With COVID-19 turning upside down the real estate industry it might not even be feasible, operationally speaking: - How to get a handle on property valuations? The uncertain prospects of a quick economic recovery have made property valuation a very difficult problem in short to mid-term.
- HE needs time to change the underwriting rules to price in the new increased risk.
- There are also expectations for more defaults; with no new investors, where is HE going to find the money for new mortgages – assuming that a borrower will show up in short term?
thebigshort , thanks for your insightful posting. I hope that Tim Dwyer will find a way to confirm your assumption / hope that he is NOT currently underwriting new mortgages. In case HE is still contemplating new mortgages, the management should remember what happened last time when they used the business model that worked well for 5+ years to grow the fund from $66M in 2011 to $260M. That simplistic model was not enough to support the aggressive growth and the result was that HE invested in mortgages without enough due diligence, which led to bad loans piling up. The fall would be much worse now, everything is different and the uncertainty is to its max
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bob
New Member
Posts: 3
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Post by bob on Jun 23, 2020 20:44:56 GMT
In case HE is still contemplating new mortgages, the management should remember what happened last time when they used the business model that worked well for 5+ years to grow the fund from $66M in 2011 to $260M. That simplistic model was not enough to support the aggressive growth and the result was that HE invested in mortgages without enough due diligence, which led to bad loans piling up. The fall would be much worse now, everything is different and the uncertainty is to its max Here is a sample of the actual underwriting practices that ruined our investment in HE: back in 2010, the combined residential and commercial assessment of the Cornwallis Inn in Kentville NS property was $4,950,800. With LTV at 60% (this was what HE told us), the max value of the loan should have been max $3 mil. Instead HE lent more $6,550,000, which takes LTV to 132% instead of 60% Why are we surprised by the mess we are in?
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adam
New Member
Posts: 5
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Post by adam on Jun 30, 2020 20:57:47 GMT
bob , your finding confirms that Perth and West Covehead are not only accidents, but rather the rule and the decrease of 44% of the asset value in 2016 was the result of HE lending our money left and right without proper due diligence, with LTV higher than 100% (by a lot!). In meantime the investors were told that the LTV is very conservative (60%) and the preservation of capital was the main objective. Obviously now, a lie! Our fellow investors Mr. McNally and Mr. Wallace are aggressively defending LD's performance as a CEO and his skills to restore the fund to its good standing. How do they feel about the findings about the actual value of the assets left in the fund - a lot less than on paper when disposed. I am curious because their investment is lost too and they should be concerned.
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Post by nemesis on Jul 1, 2020 18:36:33 GMT
I am curious because their investment is lost too and they should be concerned.
The cynical side of me says: There are always side deals to be made. If investors don't know about such deals, then there are no consequences for making them.
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Post by thebigshort on Jul 3, 2020 21:40:01 GMT
Besides possible side deals, we also have to consider the bad math and wrong assumptions that misleads the advocates of the reorg plan to draw the conclusion that the value of their investment will be restored and the loss will miraculously go away.
The fact that HE underwriting practice was to lend more money that the property value is depressing and tells us to be prepared for a significant loss.
Hopefully many investors are reading the postings on this forum and if in doubt they will consult their financial advisor for an objective opinion
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Post by nemesis on Jul 4, 2020 16:13:17 GMT
Besides possible side deals, we also have to consider the bad math and wrong assumptions that misleads the advocates of the reorg plan to draw the conclusion that the value of their investment will be restored and the loss will miraculously go away.
The fact that HE underwriting practice was to lend more money that the property value is depressing and tells us to be prepared for a significant loss.
Hopefully many investors are reading the postings on this forum and if in doubt they will consult their financial advisor for an objective opinion
Your comments do bring us to one of the big questions concerning the management of this MIC. INCOMPETENCE OR GREED? Of course it could be both.... but I have yet to receive an answer from HE or from HE supporters like McNally and Wallace as to how management travelled so far down the path of taking on mortgages that were bound to go sideways. Or was this a Dunn plan from the beginning? To gather up great fees for himself by signing up new mortgages and eventually acquiring 'distressed' properties to build his development company. After all the talk about due diligence and working so hard on behalf of investors to preserve capital, he did exactly the opposite. If there was due diligence to be had, then mortgages with RIDICULOUS LTV would not have been considered in the first place. So I guess we pick between stupid and devious here. And I don't think that Larry fancies himself as looking stupid.
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brad1
Full Member
Posts: 39
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Post by brad1 on Jul 4, 2020 20:57:06 GMT
Mr. Dunn might have his abilities in real estate business, but managing a Mortgage Investment Fund is certainly not one of them.
Sadly, he was never actively in charge of the fund; he refers everything to others - lawyers, auditors, advisors. The result is that he cannot explain his own decisions / plans in other way than the lawyers/ auditors told him this is the best solution! Any CEO is consulting various experts, but in the end he is the person making and then owning the decision.
He does not recognize the data from his own balance sheet, he is surprised to see letters to investors that he signed, and he is not able to answer the most basic questions about MIC business, such as that Income Tax Act requires it to keep the real estate assets under 25%. This is not hearsay, but witnessed by my own eyes.
I am also fairly confident that the LTV topic and the “conservative” underwriting practices were covered in the marketing materials not because they were true, but merely to make HMIC attractive for new investors. Mr. Dunn might not even be aware of all the promises made in the sales materials. His strategy was simple and effective: tell investors what they want to hear, and then do whatever works for self.
Although his performance demonstrates that Mr. Dunn doesn’t have the professional competence and the ethics required to manage a mortgage fund and interact with investors, he insists on leading HMIC through a reorganization to fix / cover the disaster.
What remains a mystery for me is not his motivation, but why our fellow investors Mr. McNally and Mr. Wallace are aggressively defending Mr. Dunn’s performance as a CEO and his skills to restore the fund to its good standing.
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