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Post by tycone on Dec 20, 2019 4:58:26 GMT
Fact is, when the MIC has a default rate of nearly 50%, someone did not do their due diligence, or loaned to flakes at valuations that cannot be supported by the value of developments they loaned against! We would not be in this mess if a 60% loan to value ratio was adhered too. When you have too much money on hand to loan out and need to meet your monthly interest payments, you will take greater risks and lower you guard. I am sure the higher risk borrowers paid higher fees.
At the end, when you loan out under these principles, get left holding the bag!
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Post by tycone on Dec 20, 2019 11:23:27 GMT
By the way, just realized that we were discussing two different Management rates here....the 2% Initial Management fee, which subsequently went to 1%, is charged to the investors for ongoing “management” of the fund. (It really should be zero until such time as the fund reverts back to paying a promised 10% return and not 3%, ( I could get this at the bank) or regain some stability in the fund.
The real money was the fees management collected from the borrowers when underwriting the loans! ( likely, 2-5%- this is the trough)
I believe the MIC had loaned close to $800M since it’s inception.....do the math! It is very tempting to change the loan to value ratio and take on greater risk when these types of funds are at stake for Management! Yum, Yum...
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Post by thebigshort on Dec 20, 2019 14:38:59 GMT
“ loan to value 65% max of appraised “ “ we do the appraisals “ IF  One defaults we have in-house developers ( Larry ) to improve the property and sell at a profit “ win win . Sound familiar to anyone ? Does this sound like a high risk “ pitch “ ? Numerous conversations w management through the years were absolute positive “ all’s great “ NO Worries . Relax . Any of these cheerleader catch phrases ring a bell ? I know for a fact (from Larry himself) that their appraisal was based on the value of the final project when calculating LTV! Hard to believe, this is why we are in this mess and we are in for a big loss... |
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Post by disgustedbeyond on Dec 20, 2019 18:18:47 GMT
To think that this forum is invisible to management is silly . I don’t see any merit in a “ poll “ as to what we would settle for . 😡
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Post by analyst on Dec 21, 2019 18:31:59 GMT
My understanding is that HE, as manager of the fund, has not taken any management fees since they froze redemptions several years ago. The management company has been primarily compensated through commitments fees charged to the borrowers.
On the question of LTV ratio they regularly published (that is before they stopped providing investors with quarterly reports) AVERAGE LOAN TO VALUE ratios for the portfolio. This is a meaningless number and only made investors believe their investment had a high margin of downside protection.
Changing managers can be a challenge but expecting those who got you into trouble are best positioned to get you out of trouble is delusional.
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Post by Moderator on Dec 21, 2019 21:45:55 GMT
Might it be a good idea to invite HE management to participate in these discussions? They could answer questions and comment on rumours and speculations. , you are perfectly right, HE management should be the most interested to find out what are the Investors' needs, requirements, and concerns in order to address them. Companies around the world spend significant $$$$ to encourage the open communication with their customers and to address their concerns. H E has the contact info of each Investor and its own website; HE has the means to organize surveys, consultations, and information sessions on their own if they want to communicate effectively with Investors. |
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Post by nemesis on Dec 21, 2019 22:29:27 GMT
One wonders why HE management has never held an investor general meeting. I mean, I know that management doesn't want investors comparing notes
but it seems that many other investors haven't asked the correct questions directly or probably have been fobbed off with some vague response.
There is a reason that management hasn't been sending investors good and up-dated information on a timely basis.
There is a reason that investors did not receive financials until a few days before the 'vote'.
It seems highly inefficient to address advisors' questions and concerns one by one by asking for an individual meeting each time.
If management is committed to clarity they would obviously have convened an investor meeting open to all interested parties.
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Post by Moderator on Dec 22, 2019 2:11:36 GMT
So in saying that we are in for a big loss, how about the moderator set up a poll to see what this group will settle for and put it as 50 cents on the dollar or less, 70 cents or 80 cents and up. I get the feeling that the push of this group is to cash out so let's see what the group says. I'm curious. One of the objectives of this Forum is to find the best path to recover the Investors money from HE and not just part of it. You seem to disapprove the idea of this group seeking to "cash out" their funds (that is in fact our contractual right to redeem the initial investment) and suggest we find out if the group is ready to settle for cents per dollar. The answer is that the Investors aim to redeem their investment in accordance to the Purchase Agreement they have with HE, i.e. $1 per each Class A share. Could you, please, explain why, as an Investor, find this curious? |
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Post by forexloonie on Dec 23, 2019 1:33:47 GMT
maryanne Me too! If we had someone else or another team that we thought would be better than management and we could quickly put them in place, I'd consider it. But I don't think anyone does. And I don't like the other alternative of a fire sale. So we have to make a decision. An orderly wind-up sounds good to me. If HE management agrees to cooperate to this option, everyone wins, including them. Check on Treaz Capital MIC that although a public company had the same type of business, MIC Treaz Capital Mortgage Investment Corporation Wind-up |
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One defaults we have in-house developers ( Larry ) to improve the property and sell at a profit “ win win . Sound familiar to anyone ? Does this sound like a high risk “ pitch “ ? Numerous conversations w management through the years were absolute positive “ all’s great “ NO Worries . Relax . Any of these cheerleader catch phrases ring a bell ? 
