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Accredited Mortgage Loan REIT Trust Message Board

  • umbrella_pine umbrella_pine Jul 10, 2009 4:14 PM Flag

    Delaware Attorney Letter

    Received mine today. 7/28 hearing scheduled on motion to switch AHL entities from chap 7 to chap 11 will be held. Must have scared a few people today. Can't imagine who would be buying so even minor selling is crushing. . Wonder when we get some valuation information.

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    • "Even if the '02 has value, would trusts that have negative value not have a claim on other REIT assets?"

      No they don't according to the prospectus. Each trust stands or falls on its own. Each trust is a separate entity.

    • Well, I guess the question I have is if the equity in the REIT was pretty skinny at the end of '07, I would assume that the value has declined some (an understatement) since that time. From an accounting standpoint, the liabilities wouldn't move much, but the asset value would seem to have been written down to the point there is negative equity in the REIT, right? Even if the '02 has value, would trusts that have negative value not have a claim on other REIT assets? I guess that would be the only way this has value, right?

    • Again, the REIT owns different mortgage trusts - most of which are worthless. But the REIT does own 2002 trusts that are rated A by Moody's and had a LTV of 80. It is these 2002 trusts that might be worth something. The rest is garbage.

      We received a dividend in Jan., so evidently up to that point some trust was generating enough cash to pay us after the 20% over-collateralization test was met. I suspect that it was the 2002s. So unless they have lost 20% of their value since Jan., there should be something left for us. We'll see.

      Remember they own the trusts not the mortgages themselves and each trust stands or falls on its own. It's just like you and your different holdings. You don't owe anything if the stocks you own go bankrupt - you just don't get any of your money back. However, if even one of your holdings does not go bankrupt - you still have that one.

    • The most recent finanicials were at the end of 2007, showing something like $5.2 billion in garbage mortgages and about $5.1 billion in secured financing for those mortgages, and not much else in assets. My math might be off here, but assuming those toxic assets could be sold for even 85 cents on the dollar (not likely), that would make this preferred worthless, right? Even at 90 cents it's worth zero. How is it even in the realm of possibilities that secured creditors are covered, and there would something left over? Can someone please explain this? Ask yourself how much you would pay for subprime securities in this market, most in CA/FL, and at an average '05 LTV of 90% (so currently about 150% LTV). I would pay 20-25 cents at most.

    • Lonestar themselves may have pumped money into the reit. In that case they would be a creditor to their own company and ahead of us in line.

    • One caveat to mizesaw's helpful summary - do we know in fact that there are no liabilities of the REIT senior to us preferred holders? LS or LEND could have inserted an intra-group or even a third party loan senior to us, which would get paid off first when the REIT is liquidated. The last time I checked this was an unknown, but I haven't been able to discern from the BK filings and someone else may have done so.

    • The reason we are on the list is because LEND is the GUARANTEER of our $25.00 that each share is worth. And as you point out, we are so far down the list, that the GUARANTEE is worthless. If LEND had stayed solvent, they would owe us $25 even if the REIT went belly up. That's what being the GUARANTEER means.

      However, we are first in line to receive any assets in the REIT. We are the senior holders of the REIT and LEND was the junior holder since they held the common shares.

      What is important is what the REIT consists of, and that is a number of mortgage trusts. Each of the trusts are required to be over-collateralized - meaning that in addition to the mortgages themselves, LEND deposited additional monies in order to get a higher credit rating for each trust. How the REIT worked was that as long as the over-collateralizion test was met, any excess funds flowed in as profit to the REIT. If a trust failed the over-collateralization test, the trust retained all earnings until enough was saved to restore over-collatereraliaztion.

      In a liquidation, the senior holders of each trust will be payed off - the mortgage holders; after that, anything left over is ours. Now I would expect that there is no hope for us to receive a dime from any trusts other than the 2002s. If home prices have simply fallen back to 2002 levels, then the 2002s should now be exactly where they were when they were first put into the trusts. So, in theory, if the 2002s can be auctioned off and sold for the exact same price as when they were put into the trust, the bond holders will get 100%. But then we get what remains of the over-collateralization in those trusts. Now since we have no audited figures about the individual trusts, it's hard to tell what if anything we are going to get.

    • I hope you are right, but not sure you are. The BK papers have all of us preferred holders on the list of creditors for the holding company and if that is how we are treated, we are pretty far down on the list of who gets paid. A better question to ask is, who is representing our interests in BK court? No shareholder committee usually translates to no recovery. Too late to sell, though, so I'm holing until the end.

    • Why do you keep posting ignorant comments when it has been repeatedly posted on this board that we do NOT have LEND stock. Lonestar bought all of that and will have no recovery on its common stock since the liabilities obviously exceed the assets as even you pointed out. The posters to this board have preferred stock in the REIT which is an independent trust. LEND owned all of the common stock of the trust entity and will get no recovery from that either unless we, the preferred holders of the AHHAP trust, are paid in full -- not likely. We come before the common shares of the REIT and if there are assets above the liablities of the trust, we will have some recovery. The assets of the trust are the mortgages securing the bonds issued by the REIT (not LEND) and we just have to see if there is anything left after those bondholders are paid. Of course those bondholders have been paid interest and principal from repayments all along so the principal owed on the bonds does decline over time. As others have pointed out, whether there is anything left for us after the trust is fully liquidated is anyone's guess because we do not know how many mortgages are in default and what percentage is recovered from the mortgage collateral in each case of default, but I tend to think there will be some assets left over. Remember, first the trust had to lose all of the common equity it started with (provided by LEND) and then all of the preferred "equity" that was originally $25 per share before we get absolutely nothing. Again, the final answer is not predictable at this point.

    • Lone Star filled for chapter 11. It is the creditors who are asking for chapter 7. Which one it will finally be is up to the judge.

      As for the REIT, it is not part of the bankruptcy, since it is a separate entity. There may or may not be anything there for preferred holders. Hard to tell since Accredited has released no financial data.

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