Mortgages Ltd. gets 'breathing room’ with loan - East Valley Tribune: Business

Mortgages Ltd. gets 'breathing room’ with loan

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Posted: Wednesday, August 6, 2008 8:52 pm | Updated: 11:55 pm, Fri Oct 7, 2011.

U.S. Bankruptcy Judge Randolph Haines approved $500,000 in debtor-in-possession financing for Mortgages Ltd. Wednesday, saying he believes the company that has financed several high profile projects in the Valley has a chance to become a viable enterprise in the future.

The money will allow the company to pay its employees and continue operation until more permanent financing can be obtained.

Mortgages Ltd., based at 44th Street and Camelback Road in Phoenix, was run by Scott Coles, who committed suicide in June. Shortly thereafter the company plunged into Chapter 11 proceedings.

The $500,000 loan is being provided by Phoenix-based Stratera Portfolio Advisors LLC, which also has agreed to provide an additional $4.5 million later.

The loan is intended to give Mortgages Ltd. "breathing room" as it tries to stabilize its business and find permanent financing to stay in business, company officials said.

The company raises money from investors and then loans it to developers who repay the loans from income from their buildings. Mortgages Ltd. then repays its investors with interest after taking servicing and other fees.

However, the company has not made any new loans or raised any money from investors since entering Chapter 11, officials said. Also, only one-third of the company's loans are currently performing, Mortgages Ltd. officials testified Wednesday.

The money from loans that are being repaid is being sequestered in a special bank account and by court order cannot be used by Mortgages Ltd. for operations or to repay investors.

The $500,000 loan was opposed by several borrowers whose loans had not been fully funded by Mortgages Ltd. before it entered bankruptcy. They said the company cannot be revived and should be liquidated.

Among the project financed by Mortgages Ltd. is the nearly completed Centerpoint high-rise condos in Tempe.

Mortgages Ltd. President Richard Feldheim said the company hopes to raise addition money soon, possibly from the Stratera loan, so the project can be completed.

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